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Shocks to macroeconomic state variables and the risk premium of REITs

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Author Info
James E. Payne
Abstract

Following the work of Chen, Roll, and Ross ( Journal of Business , 59 , 383-403, 1986), there has been considerable work examining the influence of macroeconomic state variables on the excess returns of REITs. While most of the previous research has focused on the examination of equity REITs, this paper examines the three broad classification of REITs: equity, mortgage, and hybrid. This exploratory study identifies the response of REIT excess returns to unexpected changes in the broader stock market, real output growth, inflation, term structure of interest rates, default risk, and the federal funds rate using the generalized impulse response analysis.

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Article provided by Taylor and Francis Journals in its journal Applied Economics Letters.

Volume (Year): 10 (2003)
Issue (Month): 11 (September)
Pages: 671-677
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Handle: RePEc:taf:apeclt:v:10:y:2003:i:11:p:671-677

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    Other versions:
  2. Vinod Chandrashekaran, 1999. "Time-Series Properties and Diversification Benefits of REIT Returns," Journal of Real Estate Research, American Real Estate Society, vol. 17(1), pages 91-112. [Downloadable!]
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  15. K.C. Chan & Patric H. Hendershott & Anthony B. Sanders, 1991. "Risk and Return on Real Estate: Evidence from Equity REITs," NBER Working Papers 3311, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Ewing, Bradley T, 2002. "The Transmission of Shocks among S&P Indexes," Applied Financial Economics, Taylor and Francis Journals, vol. 12(4), pages 285-90, April. [Downloadable!] (restricted)
  17. Karolyi, G Andrew & Sanders, Anthony B, 1998. "The Variation of Economic Risk Premiums in Real Estate Returns," The Journal of Real Estate Finance and Economics, Springer, vol. 17(3), pages 245-62, November. [Downloadable!] (restricted)
  18. Pesaran, H. Hashem & Shin, Yongcheol, 1998. "Generalized impulse response analysis in linear multivariate models," Economics Letters, Elsevier, vol. 58(1), pages 17-29, January. [Downloadable!] (restricted)
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  19. Koop, Gary & Pesaran, M. Hashem & Potter, Simon M., 1996. "Impulse response analysis in nonlinear multivariate models," Journal of Econometrics, Elsevier, vol. 74(1), pages 119-147, September. [Downloadable!] (restricted)
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