Stock Prices, News, and Economic Fluctuations
We show that the joint behavior of stock prices and TFP favors a view of business cycles driven largely by a shock that does not affect productivity in the short run ? and therefore does not look like a standard technology shock ? but affects productivity with substantial delay ? and therefore does not look like a monetary shock. One structural interpretation for this shock is that it represents news about future technological opportunities which is first captured in stock prices. This shock causes a boom in consumption, investment, and hours worked that precedes productivity growth by a few years, and explains about 50 percent of business cycle fluctuations. (JEL G12, E32, E44)
Year of publication: |
2006
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Authors: | Beaudry, Paul ; Portier, Franck |
Published in: |
American Economic Review. - American Economic Association - AEA. - Vol. 96.2006, 4, p. 1293-1307
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Publisher: |
American Economic Association - AEA |
Saved in:
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