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This paper uses structural vector autoregressive models (SVARs) to show that the response of US stock prices to fiscal shocks changed in 1980. Over the period 1955-1979, an expansionary spending or revenue shock was associated with higher stock prices. After 1980, the response of stock prices to...
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A tractable model with infinitely lived agents is constructed for the examination of bubbles and unemployment. It is … demonstrated that the presence of bubbles stimulates capital accumulation and reduces unemployment. The presence of bubbles also … changes the effects of government policies that target unemployment and welfare conditions in the labor market. The main …
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