Stock market expectations, effects on prices and aggregate income

Marcello Spano' ()

Departmental Working Papers from Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano

Abstract: Greenwald and Stiglitz (1993) show that firms' capital structure (equity vs. debt) may strongly affect aggregate output and employ-ment as a consequence of undiversifiable bankruptcy costs. This paper extends the framework by analysing the macroeconomic effects of share price fluctuations which arise from the stock market and which are cor-related to prices of goods. The stock market appears to speed up the transmission mechanism linking nominal shocks to aggregate output and employment, as share price variations (bull and bear stock mar-ket) anticipate the real effects of aggregate price shocks before they occur.

JEL-codes: E3 E32 G19 (search for similar items in EconPapers)
Date: 2003-01-01
New Economics Papers: this item is included in nep-fin
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://wp.demm.unimi.it/files/wp/2003/DEMM-2003_025wp.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to aaa.unimi.it:80 (nodename nor servname provided, or not known) (http://wp.demm.unimi.it/files/wp/2003/DEMM-2003_025wp.pdf [302 Found]--> http://aaa.unimi.it)

Related works:
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:mil:wpdepa:2003-25

Access Statistics for this paper

More papers in Departmental Working Papers from Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano Via Conservatorio 7, I-20122 Milan - Italy. Contact information at EDIRC.
Bibliographic data for series maintained by DEMM Working Papers ( this e-mail address is bad, please contact ).