Some economists see a silver lining to the global surge in borrowing costs: the economy is strong enough to handle them.

Economies around the world are showing surprising resilience to higher central bank-interest rates and government bond yields that have jumped to multidecade highs across the developed world. The Federal Reserve, Bank of Japan and European Central Bank are among central banks that have lifted interest rates to contain inflation driven by the war with Iran.

Investors expect they will not only keep tightening policy, but hold rates at higher levels for the foreseeable future. The economy's strength in the face of higher borrowing costs suggests it has shifted into a higher gear, helped by a surge in artificial-intelligence investment that economists hope will boost productivity for years to come.

While rising rates make borrowing money to invest in a business or buy a house more expensive and depresses demand, there are signs that the economy overall has the strength to withstand them.

Stocks have also weathered the rise in rates better than many had feared, with corporate profits holding up and the AI trade intact. While many on Wall Street are warning that high rates could pull money out of the stock market and into higher yielding bonds, so far that hasn't materialized.

"It is a positive sign that the economy can sustain higher rates, because there is essentially more underlying growth," said Sven Jari Stehn, chief European economist at Goldman Sachs.

Economists are raising estimates for a key indicator known as the neutral rate of interest-an elusive level where borrowing costs neither restrict nor stimulate growth.

Neutral rates are often described as a guiding light for central bankers, though policymakers say they don't directly target them. Fed Chairman Kevin Warsh on Wednesday described neutral rates as "useful academically" but not relevant to his decision-making. Neutral rates cannot be directly observed, and instead must be inferred. Rising growth and price-pressures suggest policy rates are below neutral, while weakening inflation and growth suggest rates are above neutral.

Throughout this year, some Fed policymakers described the central bank's policy as slightly restrictive. On Wednesday, Warsh said he and his colleagues were "hard-pressed" to find evidence of that, with the labor market strengthening. He described the rate-increase as removing a "dose of accommodation."

The Fed's latest rate projections showed the median neutral-rate estimate rose to 3.25% from 3.1%, an unexpectedly large increase, according to Goldman Sachs. The ECB's chief economist this summer estimated the eurozone's neutral rate range has risen by a quarter-percentage point, to 2.5% at the top end. Japan's neutral rate has also risen by about a quarter-point, Goldman estimated last month.

The rise in neutral-rate estimates has helped fuel the selloff in long-term government bonds, said Daniel Harenberg, lead economist at Oxford Economics. Bond yields reflect where investors expect central bank interest rates to be in the future, as well as other factors like debt sustainability.

Harenberg believes the rise in global neutral rates is just getting started. He projects the rate will rise another half-percentage point in the U.S. over the next five years, and about a quarter-point in the eurozone.

Expectations for higher AI-driven productivity are partly responsible for the rise in both the U.S. and Europe, though Harenberg expects Europe will take longer to see the full effect due to slower adoption.

"More productivity growth brings in more tax revenue, which makes higher interest rates more manageable," Harenberg said. "That's a good place to be."

Other drivers of higher neutral rates are more worrying, he said, such as higher government-debt levels. Rising government debt means borrowers have to pay higher interest rates to motivate investors to buy more.

Neutral rates have been on the decline since the 1980s, academic research has shown. Many economists attribute the fall in part to higher demand for retirement savings as populations aged, and less appetite for productive investment. That was followed by what former Fed Chair Ben Bernanke called the "global saving glut" in the early 2000s. He argued countries like China were further driving down interest rates by investing their huge trade surpluses into safe assets like U.S. Treasurys.

The Fed's Warsh last month said the savings glut is now over. "This moment is one of a global investment surge," he said.

Central banks are likely to welcome higher neutral rates, sometimes referred to as r*. It gives them more room to raise rates to fight inflation and space to cut them during a downturn to stimulate growth. During the 2010s, many central banks fretted over low rates, which they worried would constrain their ability to cut rates during a crisis to boost growth.

"The low rate [was] a canary in a coal mine telling us that the future looks bleak," said Lukasz Rachel, an economics professor at University College London. "In that sense higher neutral rates is a good news story."

Rachel still worries there will be victims from the sharp rise in yields, such as governments who will struggle to cover rising interest bills.

"Transitioning from the world of secular stagnation to the world of high and rising yields in a space of a few years...inevitably will catch some off guard," he said.

And some economists question whether growth prospects have fundamentally brightened, especially outside the U.S.

"In the U.S., it makes more sense to believe the neutral rate has gone up. In Europe, I'm still struggling," said Carsten Brzeski, global head of macro research at ING. "I don't see the productivity growth story here. I don't see an increase in potential growth."