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Financial Sector Dynamics

  • Nicolas Carnot
  • Vincent Koen
  • Bruno Tissot

Abstract

Financial indicators play a key role in forecasting exercises: the evolution of major asset prices such as interest rates (which relate to the price of a short-term loan or a bond), equities, house prices and exchange rates has large implications for how the macroeconomic outlook evolves. As stressed in Chapter 3, asset prices can exert substantial wealth effects on consumption behaviour, since a large share of household wealth is held in the form of bonds, stocks and housing. Asset prices also play an important role in driving business investment. In turn, asset prices are driven by various forces including macroeconomic developments, and in particular by interest rates, taxation, demography and international factors (such as the portfolio strategies of global fund managers).

Keywords

Exchange Rate Interest Rate Monetary Policy Financial Crisis Central Bank 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Nicolas Carnot, Vincent Koen and Bruno Tissot 2011

Authors and Affiliations

  • Nicolas Carnot
  • Vincent Koen
  • Bruno Tissot

There are no affiliations available

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