Proposed explanations for the decline in interest rates, in addition to the decline in the rates of inflation and real GDP growth, include changes in the saving-investment balance.13 Various factors are said to be responsible for such changes: demographic forces; higher inequality; the glut of precautionary saving by emerging markets; the decline in the relative price of capital; the high profitability of large IT firms and their large cash reserves; lower public investment; the shortage of safe assets; and the improvement in fiscal conditions.
However, it is telling that, despite these developments, competitiveness effects were less important than the drag coming from market structure.3 Our exports are concentrated in slowgrowing advanced economies, particularly the United States, rather than fast-growing emerging markets.