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Equity Prices, Productivity Growth, and the 'New Economy'
| Content Provider | EconStor |
|---|---|
| Author | Madsen, Jakob B. Davis, E. Philip |
| Abstract | The sharp increase in equity prices over the 1990s was widely attributed to permanently higher productivity growth derived from the New Economy. This paper establishes a rational expectations model of technology innovations and equity prices, which shows that under plausible assumptions, productivity advances can only have temporary effects on the fundamentals of equity prices. Using historical data on productivity of R&D capital, patent capital and fixed capital for 11 OECD countries, empirical evidence give strong support for the model by suggesting that technological innovations indeed have only temporary effects on equity returns. |
| File Format | |
| Language | English |
| Publisher | University of Copenhagen, Economic Policy Research Unit (EPRU) |
| Publisher Date | 2004-01-01 |
| Publisher Place | Copenhagen |
| Access Restriction | Open |
| Rights Holder | http://www.econstor.eu/dspace/Nutzungsbedingungen |
| Subject Keyword | new economy productivity economic growth equity prices Börsenkurs Produktivität Welt New Economy Asset Pricing; Trading Volume; Bond Interest Rates Corporate Finance and Governance Economic Growth and Aggregate Productivity |
| Content Type | Text |
| Resource Type | Article |
