Risk & Reward

Research and investment strategies - 2T 2013

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In most developed economies the post-war years since 1945 saw sustained business cycle expansions alternating with shorter recessions. In general, the problem the authorities had to confront at the end of each expansion was inflation, which they dealt with by raising interest rates and slowing credit growth. When inflation subsided, interest rates were lowered again. So long as balance sheets remained broadly healthy recovery occurred quite quickly as companies and households increased borrowing in response to lower rates. However, when an expansion was accompanied by a bubble in asset prices and then a bust, the recovery process became more difficult and protracted. Can a model be developed to explain this process? And what does it suggest for the current recovery, particularly in the US?

Source : Invesco Real Estate

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Mots-clés : Invesco Real Estate