Economics, Econometrics and Finance
3 years ago

Monetary Policy Found to Drive Financial Asset Prices Higher Than Non-Financial Assets

RePEc: Research Papers in Economics
Financial Asset Valuations: The Total Demand Approach
Vytautas Žukauskas, Guido Hülsmann

Paper Summary

Financial asset prices can be influenced by monetary policy, contrary to the standard view. The total demand approach shows that monetary policy can cause financial asset prices to rise faster than non-financial asset prices. This approach simplifies the theory of monetary policy and allows for a better understanding of unconventional monetary policy and changes in the quality of money.

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