it has long been known that real interest rates have shown a falling trend around the world over the last few decades. the “ global ” real interest rate, i. e. an average of real rates for risk - free assets ( here measured using ten - year government bonds ) in the major economies, has shown a falling trend of just over 4 percentage points since the end of the 1980s and is currently slightly below 1 per cent ( see figure 3 ( a ) ). the global real interest rate is important for small, open economies. in a world with the free movement of capital, it is difficult for a small economy to have real interest rates that deviate a lot from the global real interest rate level. this does not mean, however, that the real interest rate in sweden always has to correspond exactly to the rate abroad. deviations can exist both in the short - and long - term for various reasons. in the short - term, economic activity can develop differently in sweden and abroad, which can affect real interest rates. deviations can also take place over longer periods, depending, for example, on different trends in population development or productivity growth. but just as in other countries, there has been a downward trend in the real interest rate in sweden. the real interest rate for two -, five - and ten - year government bonds has fallen from around 6 per cent at the end of the 1980s to almost - 2 per cent today ( see figure 3 ( b ) ). 6 figure 3. global real interest rate and swedish real interest rates from a historical perspective 3 ( a ) global real interest ra te 3 ( b ) swedish real interest rates real interest rate, 2 years real interest rate, 5 years real interest rate, 10 years global real interest rate, 10 years, weighted average ( gdp ) - 2 - 4 note. per cent. the broken trend line has been calculated using the hp filter. real i nterest ra tes a re ca l culated as nominal government bond yi elds minus actual i nflation. the calculation of the global rea l interest ra tes includes the euro a rea ( as of 1995 ), ja pan, ca nada, the united ki ngdom and the uni ted states. sources : bureau of economic analysis, eurostat, japanese statistics bureau, ma crobond, oecd, offi ce for national statistics, statistics sweden and statistics ca nada falling global real interest rates can be caused by secular

stagnation... research provides several different explanations for the falling trend in global real interest rates. 3 the explanation that has probably received the most attention recently is the theory of secular stagnation, developed by the american economist lawrence summers. 4 according to him, weaker global demand and lower growth, which can be long - lasting, lie behind the low level of interest rates. the weak demand is, in turn, due to various structural factors that have led more people wanting to save and fewer wanting to invest. both of these parts tend to push the real interest rate down. demographic factors may provide an explanation for why the willingne ss to save has increased. average life expectancy in the population has risen in both developed countries and emerging economies in recent decades. this may lead more people to wish to save for their old age. in a lifecycle perspective, saving is highest in middle age, when most people ’ s earnings are highest and they are very motivated to save prior to retirement. so the greater number of middle - aged people today may thus provide an explanation for the increase in saving. if the saving is intended for future retirement, one effect of the falling real interest rates may also be that many people need to save even more to reach their saving targets. another explanation for the increase in saving, particularly during the 2000s, has been put forward by the former chairman of the federal reserve, ben bernanke. 5 according to him, the increase in saving that occurred in china and other asian 3 see fischer ( 2016 ), sveriges riksbank ( 2017a ) and rachel and smith ( 2015 ) for an attempt to quantify the significance of the various explanations. 4 see summers ( 2014 ). 5 see bernanke ( 2015 ). 7 emerging economies, as well as in the major oil - producing countries, contributed to the downward pressure on interest rates. this is because the large current account surpluses in these regions have been invested on the global capital markets, resulting in low real interest rates. the falling trend in real interest rates may also be due to a reduced willingness to invest. in an article that has attracted much attention, the famous american economist robert gordon claimed that the pace of innovation has declined sharply since the 1970s. 6 in his opinion, growth between 1870 and 1970 was abnormally high thanks to relatively simple and growth - promoting innovations, such as electricity and the combustion engine. according to gordon, it will not be possible to repeat this growth as today