In the past few years, I have highlighted the increase in productivity growth and the possibility that it could be a lasting phenomenon and a great boon to the economy. The implications for interest rates, though, remain an active area of debate. The economics suggest that the answer depends heavily on whether the productivity growth happens unexpectedly or is anticipated to be coming in the future. Some view the lesson of the 1990s in the United States to be that faster productivity growth can mean lower rates because it lowers inflation. At the time, then-U.S. Federal Reserve Chairman Alan Greenspan argued that ... (full story)