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What is the linkage between real growth in the Euro area and global financial market conditions ?

  • Jean-Michel Sahut
  • Medhi Mili
  • Frédéric Teulon

This paper deals with transition/transmission mechanisms through which world financial market conditions indicators affect real economic growth in the Euro area. The informational content of financial variables for predicting real economic growth is assessed, allowing for asymmetric responses to shocks. A nonlinear framework is developed based on a smooth transition model for which the effects of shocks can vary across business cycles when financial indicators modify both the endogenous and state variables. Global financial variables are shown to significantly affect real economic growth in the Euro area.

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Paper provided by Department of Research, Ipag Business School in its series Working Papers with number 2014-324.

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Length: 17 pages
Date of creation: 02 Jun 2014
Date of revision:
Handle: RePEc:ipg:wpaper:2014-324
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