and lopez - salido ( 2016 ) ; rachel and smith ( 2015 ) ; and carvalho, ferrero, and necchio ( 2016 ). - 7economists suggests that population aging - - through its effects on saving - - could be pushing down the longer - run equilibrium federal funds rate relative to its level in the 1980s by as much as 75 basis points. 10 in addition to slower growth and demographic changes, a third factor that may be pushing down interest rates in the united states is weak investment. analysis with the frb / us model suggests that, given how low interest rates have been in recent years, investment should have been considerably higher in the past couple of years. according to the model, this shortfall in investment has depressed the long - run equilibrium federal funds rate by about 60 basis points. investment may be low for a number of reasons. one is that greater perceived uncertainty could also make firms more hesitant to invest. another possibility is that the economy is simply less capital intensive than it was in earlier decades. 11 fourth on my list are developments abroad : many of the factors depressing u. s. interest rates have also been working to lower foreign interest rates. to take just one example, many advanced foreign economies face a slowdown in longer - term growth prospects that is similar to that in the united states, with similar implications for equilibrium interest rates in the longer run. in the frb / us model, lower interest rates abroad put upward pressure on the foreign exchange value of the dollar and thus lower net exports. frb / us simulations suggest that a reduction in the equilibrium federal funds rate of about 30 basis points would be required to offset the effects in the united states of a reduction in foreign growth prospects similar to what we have seen in the united states. see gagnon, johannsen, and lopez - salido ( 2016 ), figure 12. see summers ( 2014, 2015, 2016 ). see also hilsenrath and davis ( 2016 ). - 8the first figure shows the effects of these four factors. you will see that each factor is considered separately ; there is no attempt to add them together. that is because the broad factors we are considering here could well overlap - - particularly the link between slower growth and the remaining three factors. still, the comparison gives us a notion of the relative importance of some of the leading explanations for the decline in interest rates. i started by noting the costs of low interest rates, including the limits on

. liquidity standards in recognition of the fact that liquidity squeezes at some financial institutions played a key role in the financial crisis, the basel iii agreements also introduced, for the first time, quantitative liquidity requirements for application to internationally active banks. one standard, the liquidity coverage ratio ( lcr ), is designed to ensure a firm ’ s ability to withstand short - term liquidity shocks through adequate holdings of highly liquid assets. the other standard, the net stable funding ratio ( nsfr ), is intended to avoid significant maturity mismatches over longer - term horizons. again, there is a parallel to this international initiative in section 165 of the dodd - frank act, which calls for enhanced, graduated liquidity standards for large bank holding companies. precisely because this was the first effort on quantitative liquidity regulation by the basel committee, there were some questions about potential unintended consequences, as well as a desire to ensure that the new standards reflected actual experience with the stability of various funding sources and the relative liquidity of different financial instruments during the financial crisis. for these reasons, the federal reserve, with support from a number of other central banks and supervisors, suggested at the time of adoption of basel iii in 2010 a multiyear study period before the rules take effect. since then, the u. s. banking agencies and a basel committee working group have been collecting data, analyzing the potential effects of the lcr on financial markets and the broader economy, and considering what amendments might be warranted. the basel committee will likely suggest a set of changes to the lcr later this year, with a goal of introducing the lcr in 2015. work on the nsfr is on a considerably slower track ; the current plan is for implementation in 2018. resolution of sifis a third core regulatory reform goal of both the dodd - frank act and international policymakers is to enhance the ability of regulators to resolve failing sifis. the basel committee and the financial stability board ( fsb ) have set forth standards for national bis central bankers ’ speeches resolution regimes that will allow resolution of sifis in an orderly fashion, without taxpayer exposure to losses through solvency support. here in the united states, the dodd - frank act provides for an orderly resolution process to be administered by the federal deposit insurance corporation ( fdic ), and resolution planning by sifis to be overseen by the fdic and the federal reserve. together these provisions of the dodd - frank act are fully consistent with