Can Excess Liquidity Signal an Asset Price Boom?

Arbeitspapier

This paper analyses the relationship between the prevailing liquidity conditions (such as measures of money, credit and interest rates) and developments in asset prices from a monetary analysis perspective. After having identified periods of sustained excess liquidity, we analyse under which conditions they are more likely to be followed by an asset price boom. The results from a descriptive analysis of the developments in a number of macroeconomic and financial variables suggest that periods of sustained excess liquidity that are accompanied by strong economic activity, low interest rates, high real credit growth and low inflation have a higher likelihood of being followed by an asset price boom. This conclusion is also confirmed by a logit analysis.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: NBB Working Paper ; No. 117

Classification and Topics

• Classification: Wirtschaft ; Demand for Money ; Money Supply; Credit; Money Multipliers ; Monetary Policy
• Subject: excess liquidity ; asset prices ; logit model ; Geldmenge ; Geldpolitik ; Liquidität ; Zins ; Spekulationsblase ; EU-Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bruggeman, Annick
• Event: Veröffentlichung
• (who): National Bank of Belgium
• (where): Brussels
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/144330
• Last update: 10.03.2025, 11:44 AM CET