Marco Del Negro, Elena Elbarmi, and Michael Pham on global r* in Liberty Street Economics

Marco Del Negro, Elena Elbarmi, and Michael Pham on global r* in Liberty Street Economics

Published February 25, 2026, Marco Del Negro, Elena Elbarmi, and Michael Pham argue that global r* rose after COVID but remains well below its level in the 1990s. They define global r* as the common trend in real rates across the countries in their sample, estimated with a “trendy VAR” that extracts common trends across variables. Their model estimates a rise of about 0.8 percentage point globally from 2019 to 2024, smaller than the preceding decline. The authors stress that the level estimates are uncertain, while the model detects changes over time with greater statistical confidence. They estimate that a decline in the convenience yield—the appeal of government bonds for safety and liquidity—accounts for about one-third to one-half of the post-COVID rise, but say that estimate is imprecise and the remaining drivers matter more. They point to possible AI-driven productivity growth and future debt increases as candidates; they report that Lukasz Rachel’s Brookings paper considers both, while noting the abrupt rise is harder to explain in the model. The authors conclude that the rise is global, not just a U.S. phenomenon, and hope to update their estimates as data becomes available. What explains the part of the post-COVID rise their convenience-yield estimate does not account for?

Publication: 93a35522-dd44-2b60-6116-eee66bde954e

attribution — pass: The reading correctly attributes the post to Marco Del Negro, Elena Elbarmi, and Michael Pham in Liberty Street Economics, published by the Federal Reserve Bank of New York. It also attributes the AI and debt scenarios to Lukasz Rachel's Brookings paper as the source does. The page is a single authored post, not a listing.

Marco Del Negro, Elena Elbarmi, and Michael Pham

summary — uncertain: The reading never explains in plain language what r* itself is: the real interest rate expected to prevail over the long run, often called the neutral or natural rate. It defines global r* only as a common trend in real rates. It also does not explain why a central-bank research audience cares about r*, and it leaves "trendy VAR" and "real rates" unexplained. The definitions list is empty. A non-specialist cannot grasp the central development without this context. Smallest repair: add a plain gloss of r* and real rates, or add tooltips for r*, real rates, and trendy VAR. The rest of the summary is faithful and keeps the authors' caveats.

the common trend in real rates across all the countries in the sample is what we call global r*

date — pass: February 25, 2026 matches both the source's own dateline and originalPublished. The source kind is publisher-page, so no archive-copy disclosure is required. The reading presents no later events, and it reports the AI and debt drivers as candidate explanations rather than outcomes.

February 25, 2026

support — pass: Each claim matches the source text. The source supports the 0.8 percentage point global rise, which it says is smaller than the earlier decline, and the authors' caution about level uncertainty. It also supports the one-third to one-half convenience-yield share as imprecise, the larger remainder, the AI and debt candidates with the caveat about abruptness, the global scope, and the plan to update estimates. The closing question follows directly from the unexplained remainder.

the change in the remainder is larger and statistically more significant than the change in “cy.”

media — pass: No media was selected and no verified media candidates were supplied, so there is no media identity or relevance issue to check.