Asset Market Hangovers and Economic Growth - FEDERAL RESERVE BANK of NEW YORK

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Research Papers

Asset Market Hangovers and Economic Growth

February 1997 Number 9704

Authors: Matthew Higgins and Carol Osler

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.

Available only in PDF PDF

56 pages / 1,543 kb

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