Equity Prices, Productivity Growth and 'The New Economy'
Jakob Madsen and
E Davis ()
Economic Journal, 2006, vol. 116, issue 513, 791-811
Abstract:
The sharp increase in equity prices over the 1990s was widely attributed to permanently higher productivity growth derived from the New Economy. This article 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 gives strong support for the model by suggesting that technological innovations indeed have only temporary effects on equity returns. Copyright 2006 The Authors. Journal compilation Royal Economic Society 2006.
Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (38)
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
Related works:
Working Paper: Equity Prices, Productivity Growth, and the 'New Economy' (2004) 
Working Paper: Equity Prices, Productivity Growth and 'The New Economy (2004) 
Working Paper: EQUITY PRICES, PRODUCTIVITY GROWTH, AND ‘THE NEW ECONOMY’ (2003) 
Working Paper: EQUITY PRICES, PRODUCTIVITY GROWTH, AND ‘THE NEW ECONOMY’ (2003) 
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:ecj:econjl:v:116:y:2006:i:513:p:791-811
Ordering information: This journal article can be ordered from
http://www.blackwell ... al.asp?ref=0013-0133
Access Statistics for this article
Economic Journal is currently edited by Martin Cripps, Steve Machin, Woulter den Haan, Andrea Galeotti, Rachel Griffith and Frederic Vermeulen
More articles in Economic Journal from Royal Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and Christopher F. Baum ().