Chapter 4

Determinants of the Real Rate of Return: Evidence from Cross-Country Panel Data*

Marcelo Sánchez,    European Central Bank, Frankfurt, Germany,    E-mail:


This chapter analyzes the determinants of the ex ante real rate of return on bank deposits and equity. In the case of bank deposit rates, robust results include the lack of significance of money growth and a moderate role of foreign variables, with no significant role in particular for the world interest rate. In the case of stock returns, foreign variables also play a moderate role, with some international prices entering the regressions significantly and the world interest rate being statistically insignificant. This chapter also examines the effect ...

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