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Global liquidity as an early warning indicator for asset price boom/bust cycles

Author

Listed:
  • Lucia Alessi
  • Carsten Detken
Abstract
Based on historical experience across 18 major OECD countries over the past 30 years, this article shows that measures of global liquidity perform well as early warning indicators of costly asset price booms. These indicators are able to signal in real time whether a developing asset price boom will have serious consequences for the real economy. JEL Classification: E37, E44, E51

Suggested Citation

  • Lucia Alessi & Carsten Detken, 2009. "Global liquidity as an early warning indicator for asset price boom/bust cycles," Research Bulletin, European Central Bank, vol. 8, pages 7-9.
    • Handle: RePEc:ecb:ecbrbu:2009:0008:3
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    File URL: http://www.ecb.europa.eu/pub/pdf/other/researchbulletin08en.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    early warning indicators; asset price booms and busts;

    JEL classification:

    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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