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Title:The role of the IFO business climate indicator and asset prices in German monetary policy PDF Logo
Authors:Sterken, Elmer
Issue Date:2004
Series/Report no.:CESifo working papers 1204
Abstract:We analyze the role of forward-looking indicators, like the IFO business climate indicator and asset prices, in German monetary transmission. We show that the use of both the IFO indicator and asset prices improves the performance and interpretation of a Vector AutoRegression (VAR) model of German monetary transmission. First, we show that the Bundesbank responded more intensively to changes in the IFO indicator than to changes in GDP. Secondly, we address the role of housing and equity prices. We demonstrate that especially housing prices help to give a more accurate description of the recent history of German monetary policy.
Subjects:monetary transmission
IFO business climate survey indicator
house prices
equity prices
JEL:C82
C22
C53
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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