Why interest rate cuts may be ineffective in the new economy

Damir Tokic

Journal of Financial Transformation, 2003, vol. 7, 13-16

Abstract: This paper provides a theoretical explanation of the relationship between interest rates and stock prices in the ‘new economy’ using the investment opportunities approach for valuation of growth shares. First, it explains the creation of the bubble and the major reason for its bursting. Then, it discusses the benefits of interest rate cuts and why this might be ineffective in the ‘new economy’. Finally, it offers an alternative solution to the problem and the implications for investment portfolio management.

Keywords: Interest rates; stock price movements; bubbles; investment management (search for similar items in EconPapers)
JEL-codes: E40 G11 G12 (search for similar items in EconPapers)
Date: 2003
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining 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:ris:jofitr:1295

Access Statistics for this article

Journal of Financial Transformation is currently edited by Prof. Shahin Shojai

More articles in Journal of Financial Transformation from Capco Institute 77 Water Street, 10th Floor, New York NY 10005.
Bibliographic data for series maintained by Prof. Shahin Shojai ( this e-mail address is bad, please contact ).