The impact of changes in asset prices on real economic activity: a cointegration analysis for Germany

Andreas Nastansky and Hans Gerhard Strohe

No 38, Statistische Diskussionsbeiträge from Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät

Abstract: This paper reviews theoretical and empirical evidence of asset price movements impact on the real economic activity. A key channel is the wealth effect on consumption. Fluctuations in stock prices and housing prices influence the households wealth and could have important impacts on households consumption. In addition, stock prices may affect corporate sector investments and property prices may affect building activity. Here, the method of cointegration is used to estimate the wealth effect and the investment effect in aggregate time series for Germany after the Reunification in 1990. Moreover, we discuss the role of asset prices in the monetary policy strategy of the ECB.

Keywords: Stock Prices; Property Prices; Consumption; Investment; Central Banking Policy (search for similar items in EconPapers)
JEL-codes: C32 E21 E22 E58 (search for similar items in EconPapers)
Date: 2010-06
New Economics Papers: this item is included in nep-cba, nep-mac and nep-ure
References: Add references at CitEc
Citations:

Downloads: (external link)
http://nbn-resolving.de/urn:nbn:de:kobv:517-opus-43762 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pot:statdp:38

Access Statistics for this paper

More papers in Statistische Diskussionsbeiträge from Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät Contact information at EDIRC.
Bibliographic data for series maintained by Marco Winkler ().