Location of Repository

Liquidity and the dynamic pattern of price adjustment: a global view

By Ansgar Belke, Walter Orth and Ralph Setzer

Abstract

Global liquidity expansion has been very dynamic since 2001. Contrary to conventional wisdom, high money growth rates have not coincided with a concurrent rise in goods prices. At the same time, however, asset prices have increased sharply, significantly outpacing the subdued development in consumer prices. This paper examines the interactions between money, goods and asset prices at the global level. Using aggregated data for major OECD countries, our VAR results support the view that different price elasticities on asset and goods markets explain the recently observed relative price change between asset classes and consumer goods. --Global liquidity,inflation control,monetary policy transmission,asset prices

OAI identifier:

Suggested articles

Preview

Citations

  1. (2007). 99 Luftballons: Monetary Policy and the House Price Boom across US States.
  2. (2001). Applied Macroeconometrics.
  3. (2001). Asset Prices, Financial Conditions, and the Transmission of Monetary Policy. Federal Reserve Bank of Kansas City Proceedings,
  4. (2006). Beauty contests and iterated expectations in asset markets.
  5. (2007). Bubbles in Real Estate? A Longer-Term Comparative Analysis of Housing Prices
  6. (2008). Commodity Prices (Wonkish),
  7. (2008). Demographic Changes and Real House Prices. Forthcoming. Deutsche Bundesbank,
  8. (2006). Do monetary indicators (still) predict euro area inflation?.
  9. (1999). Global Liquidity and Asset Prices: Measurement, Implications, and Spillovers. IMF Working Papers 99/168,
  10. (2007). Global Liquidity, Asset Prices and Monetary Policy: Evidence from Cointegrated VAR Models. Unpublished Working Paper.
  11. (2007). Globalisation and Inflation: New Cross-Country Evidence on the Global Determinants of Domestic Inflation.
  12. (2007). House Prices and the Macroeconomy: Implications for Banking and Price Stability.
  13. (2005). House Prices, Borrowing Constraints, and Monetary Policy in the Business Cycle.
  14. (1990). Inference in Linear Time Series Models with Some Unit Roots.
  15. (2007). Instability of the Eurozone? On Monetary Policy, House Prices and Labor Market Reforms. IZA Discussion Papers 2547,
  16. (2004). International Monetary Fund,
  17. (2005). Irrational Exuberance. 2nd edition.
  18. (2007). Liquidity Shocks and Asset Price Boom/Bust Cycles.
  19. (2007). Monetary Policy, Vagabonding Liquidity and Bursting Bubbles in New and Emerging Markets – An Overinvestment View.
  20. (2007). Money and Housing: Evidence for the Euro Area and the US.
  21. (1997). On Stock Market Returns and Monetary Policy.
  22. (2000). Purchasing Power Parity Over Two Centuries: Strengthening the Case for Real Exchange Rate Stability,
  23. (2005). Recent House Price Developments: The Role of Fundamentals, in:
  24. (2006). Reconsidering the role of money for euro are inflation from a Bayesian perspective using group inclusion probabilities.
  25. (2007). Similarities and Convergence in G-7 Cycles.
  26. (2007). The Effects of Globalisation on Inflation, Liquidity and Monetary Policy. Speech at the conference on the
  27. (2004). The Global House Price Boom, in: World Economic Outlook - The Global Demographic Transition, Chapter II,
  28. (2006). The Liquidity Theory of Asset Prices.
  29. (2004). The Modern History of Exchange Rate Arrangements: A Reinterpretation.
  30. (2008). The Panic of
  31. (2005). The Role of House Prices in the Monetary Transmission Mechanism across European Countries.
  32. (1994). Time Series Analysis,
  33. (2006). What Is Global Excess Liquidity, and Does It Matter?

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.