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Ensuring Financial Stability: Financial Structure and the Impact of Monetary Policy on Asset Prices


Assenmacher-Wesche, Katrin; Gerlach, Stefan (2008). Ensuring Financial Stability: Financial Structure and the Impact of Monetary Policy on Asset Prices. Working paper series / Institute for Empirical Research in Economics No. 361, University of Zurich.

Abstract

This paper studies the responses of residential property and equity prices,ninflation and economic activity to monetary policy shocks in 17 countries, using data spanning 1986-2006. We estimate VARs for individual economies and panel VARs in which we distinguish between groups of countries on the basis of the characteristics of their financial systems. The results suggest that using monetary policy to offset asset price movements in order to guardnagainst financial instability may have large effects on economic activity. Furthermore, while financial structure influences the impact of policy on asset prices, its importance appears limited.

Abstract

This paper studies the responses of residential property and equity prices,ninflation and economic activity to monetary policy shocks in 17 countries, using data spanning 1986-2006. We estimate VARs for individual economies and panel VARs in which we distinguish between groups of countries on the basis of the characteristics of their financial systems. The results suggest that using monetary policy to offset asset price movements in order to guardnagainst financial instability may have large effects on economic activity. Furthermore, while financial structure influences the impact of policy on asset prices, its importance appears limited.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Institute for Empirical Research in Economics (former)
Dewey Decimal Classification:330 Economics
Language:English
Date:March 2008
Deposited On:29 Nov 2011 22:47
Last Modified:12 Aug 2017 13:05
Series Name:Working paper series / Institute for Empirical Research in Economics
ISSN:1424-0459
Official URL:http://www.econ.uzh.ch/wp.html

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