Asset market hangovers and economic growth

Matthew Higgins and Carol Osler

No 9704, Research Paper from Federal Reserve Bank of New York

Abstract: During the early 1990s, asset prices and investment were unusually weak throughout the industrial world. This paper highlights this stylized fact, and connects it with another: in most of the industrial world, asset markets boomed for several years before collapsing around 1989. The paper suggests that the sluggish asset markets and investment growth of the early 1990s may represent, in part, symptoms of an \\"asset market hangover,\\" that is, the lingering effects on real activity of collapsing speculative bubbles. The analysis relies on cross-country data for equity and real estate markets in all major and some minor industrial countries.

Keywords: Asset-liability management; Economic development; Saving and investment (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (4)

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