Jovanovic, Mario2011-01-252011-01-252011-01-25http://hdl.handle.net/2003/2758810.17877/DE290R-8182This paper investigates the driving force for German stock market behavior - stock market confidence. By using monthly new VDAX closing prices and a copula-based Markov approach, a proxy for German stock market confidence is derived. It can be shown that confidence responds to expected output changes in terms of differences of the IFO business climate index and to US confidence changes. Furthermore,German stock market behavior seems to be sticky in comparison to the United States and reduces the marginal effects of the remaining adjustment factors. JEL Classification: C12, C22, E44enDiscussion Paper / SFB 823 ; 04/2011Stock market uncertaintyTemporal dependenceVDAX-New310330620working paper