Interest rates aren't falling just because people are older—it’s actually because big companies are jacking up their prices.
SSRN · March 13, 2026 · 6298462
Why it matters
While central bankers usually blame low interest rates on demographic shifts or foreign savings, this study identifies corporate market power as a primary driver. It shows that higher profit margins allow firms to suppress investment while funneling income to wealthy owners who save at high rates, creating a cycle that forces interest rates down to 'secular stagnation' levels.
From the abstract
Contrary to the common view that attributes the decline in US interest rates over the 2000s and 2010s primarily to a global savings glut or demographic trends, we show both empirically and theoretically that rising markups were a key driver of the decline. Empirically, we find that higher markups suppressed investment, while the resulting income gains accrued to entrepreneur households at the top of the income distribution, who exhibit a high marginal propensity to save. Theoretically, an overla