However, what motivates this compilation of data is some notion that financial investment has become more attractive than physical investment, leading through the multiplier to slower growth and thus causing unemployment. The sources for the comparison are the OECD National Accounts and the Comparative Welfare States Data Set at the Luxembourg Income Study. All data presented are pre-tax. Wherever possible data are reported from the early 1960s to the middle 1990s. For the convenience of presentation 5-year averages are presented.
Interest rates are the most basic variable in discussing rates of return on financial investment.
In the postwar era the financial sector was heavily regulated, often with ceilings for interest rates, as to foster growth in the real sector, thus the moderate interest rates back then. The negative interest rates in the 1970s are due to soaring inflation at this time. In the early 1980s the monetarist revolution changed the priorities of economic policy in general and monetary policy in general, leading to an anti-inflationist policy that resulted in historically high real interest rates. First we look at household income. All countries exhibit a fairly unambiguous rise in interest and dividend income over the entire postwar era.