Report
What accounts for the rise in the equity risk premium?
In the United States and the euro zone, the equity risk premium has been higher since the crisis than it was before the crisis . We will seek to identify the causes of this rise in the equity risk premium. They may include: A trend increase in risk linked to holding equities or in the degree of risk aversion; A ratchet effect on the equity risk premium (which does not decline once it has increased); A compensation for the abnormally low level of long-term interest rates. It seems that the rise in the equity risk premium is due to: In the euro zone, a ratchet effect; In the United States and the euro zone, the low level of long-term interest rates.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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