The return of transitions

Also Interesting

• The evergreen appeal of high yield bonds
• Stronger construction activity and a pick-up in external demand
• Asia Bulletin: Time is running out to solve China’s debt bubble

Financial asset returns are determined by the long-run fundamentals of the economy. It is widely accepted nowadays that these fundamentals are two-fold, namely output and inflation. Eventually, the influence of the business cycle will decline. Output should then converge to so-called potential output, while long-run inflation depends on the ability of central banks to control the inflation expectations of economic agents.