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Discussion Paper Details

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Title: Asset Prices and Macroeconomic Outcomes: A Survey

Author(s): Stijn Claessens and Ayhan Kose

Publication Date: November 2017

Keyword(s): asset prices, equity prices, frictions, imperfections, macro-financial linkages and real-financial linkages

Programme Area(s): International Macroeconomics and Finance

Abstract: This paper surveys the literature on the linkages between asset prices and macroeconomic outcomes. It focuses on three major questions. First, what are the basic theoretical linkages between asset prices and macroeconomic outcomes? Second, what is the empirical evidence supporting these linkages? And third, what are the main challenges to the theoretical and empirical findings? The survey addresses these questions in the context of four major asset price categories: equity prices, house prices, exchange rates and interest rates, with a particular focus on their international dimensions. It also puts into perspective the evolution of the literature on the determinants of asset prices and their linkages with macroeconomic outcomes, and discusses possible future research directions.

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Bibliographic Reference

Claessens, S and Kose, A. 2017. 'Asset Prices and Macroeconomic Outcomes: A Survey'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=12460