Learning From Stock Prices and Economic Growth

Joel Peress

No 8569, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A competitive stock market is embedded into a neoclassical growth economy to analyze the interplay between the acquisition of information about firms, its partial revelation through stock prices, capital allocation and income. The stock market allows investors to share their costly private signals in a cost-effective incentive-compatible way. It contributes to economic growth by raising total factor productivity, but its impact is only transitory. Several predictions on the evolution of real and financial variables are derived, including capital efficiency, total factor productivity, industrial specialization, wealth inequality, stock trading intensity, liquidity and return volatility.

Keywords: Growth; Financial development; stock market; Capital allocation; Learning; Asymmetric information; Noisy rational expectations equilibrium (search for similar items in EconPapers)
JEL-codes: G11 G14 O16 (search for similar items in EconPapers)
Date: 2011-09
New Economics Papers: this item is included in nep-cta and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP8569 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Learning from Stock Prices and Economic Growth (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:8569

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP8569

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().