Wealth and asset price effects on economic activity

Alpo Willman, Karl Whelan (karl.whelan@ucd.ie), Filippo Altissimo, Evaggelia Georgiou, Teresa Sastre, Maria Valderrama (maria.valderrama@oenb.at), Gabriel Sterne, Marc Stocker and Mark Weth

No 29, Occasional Paper Series from European Central Bank

Abstract: Do asset prices affect real activity? This question has taken on a new importance in recent years, as asset values first surged at the end of 1990s and, thereafter, dramatically retreated. This report reviews the available theoretical and empirical evidence regarding asset price and wealth effects in Europe and some other major economies. The main focus of this report is on consumption effects via the wealth channel, reflecting the bulk of literature on the effects of asset prices. However, asset price effects on investment via the Tobin JEL Classification: D1, D3, D9, G11

Keywords: asset price; cost of capital; household wealth; marginal propensity to consume; wealth channel (search for similar items in EconPapers)
Date: 2005-06
Note: 335687
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (66)

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Working Paper: Wealth and asset price effects on economic activity (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbops:200529

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