come into operation. finally, there might be some hope in the passing of the phenomenon of “ perceived ” inflation. admittedly, not a great deal of momentum can be expected from all of the cited factors. the underlying pace of economic growth will remain subdued in the first half of next year. when exports gain momentum and the negative confidence effects on investment and consumption peter out, the upturn from the second half of 2003 onwards will be somewhat stronger and more broadly based. however, given the high degree of uncertainty and unused capacity, we expect no improvement in investment activity in the near future. we believe that investment activity will not take a turn for the better until the second half of next year. experience of investment behaviour in the past may be a further indication that the pick - up of investment in machinery and equipment will be modest. as regards investment in construction, leading indicators show that the downward adjustment process has not come to an end and is likely to continue in the near future. as i said at the very beginning, the outlook for inflation is much better than the outlook for growth. but before i turn to the price - side of the german economy, i would like to conclude my remarks on the real side of the economy with a few sentences on germany ’ s export performance. real world market shares of germany recently, there have been repeated references to a sharp decline in german world market shares since the beginning of the 1990s, and this has been regarded as indicating germany ’ s lack of competitiveness. indeed, the development of world market shares may be misleading – if conventionally calculated on the basis of nominal foreign trade values in national currencies, which have been converted by current exchange rates into us dollars - whenever there are significant exchange rate movements of the dollar. thus, a depreciation of the euro against the us dollar, if considered in isolation, necessarily results in a fall in germany's world market shares, even if its real market shares actually remain constant. to avoid these distortions it seems reasonable to calculate real world market shares, which are by definition adjusted for changes in inflation differentials and exchange rates. in contrast to the nominal world market shares, germany ’ s real shares have shown a significant increase since the mid - 1990s. germany ’ s share of global exports rose from 9 % in 1995 to 10 % at the end of 2001 and thereby regained the position held in the early 1990s. this upturn reflects, in particular, the improved price competitiveness of germany ’ s industry

explicit role for financial conditions in monetary policy so far i have discussed the pre - crisis consensus view on monetary policy and asset prices from a general perspective. the events of the past two years have already generated farreaching reflections on this issue. 11 let me mention three avenues. first, the crisis has clearly demonstrated that the economic costs of the unravelling of imbalances can be overwhelming, notwithstanding extraordinary policy action – involving both monetary and fiscal policies. recent empirical research has explored more systematically the role of monetary policy in shaping the duration and depth of recessions. 12 when no distinction is made with regard to the nature of the downturn, expansionary monetary policy is found to be consistently associated with shorter recessions. however, when considering recessions that occur in combination with financial crises, monetary policy does not have a consistent effect on the duration of recessions. these results undermine confidence in one of the arguments buttressing the pre - crisis consensus view, namely that monetary policy can forestall the negative effects of the unravelling of financial imbalances. second, the crisis has highlighted the fact that asset price misalignments can have different consequences depending on the specific market in which they arise. it may well be true that, in periods of booms in asset prices, expected capital gains are so large that interest rate movements of a standard magnitude would not be sufficient to alter investor decisions. the origins of the recent financial crisis, however, are not in equity prices, but rather related to real estate and to the abnormal growth in securitised credit backed by residential or commercial properties. leveraged financial intermediaries have also played an important role in the recent financial crisis. in this context, recent research has highlighted the fact that even small changes in policy rates can have non - negligible implications for financial institutions, which tend to systematically finance illiquid long - term assets through short - term borrowing. even small changes in short - term interest rates can affect their profitability, forcing them to close some leveraged positions and, potentially, to partially correct any financial imbalances fuelled by such leveraged positions. 13 l. christiano, c. ilut, r. motto and m. rostagno ( 2008 ), “ monetary policy and stock market boom - bust cycles ”, ecb working paper no 955. see, for example, kohn ( 2008 ) and trichet ( 2009 ). see also white ( 2009 ). international monetary fund