The traditional model and the appropriate model of the determinants of real long-term interest rates

In the traditional model, the real interest rate is exogenous in the long run . It depends on the structural features of the economy (equilibrium between supply and demand for goods and services, therefore the determinants of supply: technological progress, productivity of capital). This exogenous real interest rate (the neutral real interest rate) is imposed on the central bank, which must take it as the target real interest rate. But the reality may be completely different : t he central bank chooses the real interest rate, even in the long run. It is then the economy that adjusts so that this real interest rate chosen by the central bank is the equilibrium real interest rate. If, for example, the central bank opts for a very low real interest rate, there will be additional capital accumulation and therefore additional supply of goods and services that balances the stronger demand resulting from the low real interest rate. So instead of the traditional interpretation where the real interest rate results from the economic equilibrium and is imposed on the central bank , we have a modern interpretation where the central bank can change the economic equilibrium by choosing the real interest rate.