Conclusion

Thorsten Hens and Sabine Elmiger
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Thorsten Hens: University of Zurich
Sabine Elmiger: University of Zurich

Chapter 9 in Economic Foundations for Finance, 2019, pp 149-152 from Springer

Abstract: Abstract This book explains the long-term evolution of asset prices based on just a few basic principles: the principle of rationality applied to firms’ and to households’ decisions combined with the principle of equilibrium suffice to capture the observed long-term growth rates of stocks, bonds and commodity prices. In particular, we derived a theory of interest rates that explains asset prices from the firm’s perspective by the marginal productivity of capital and from the household’s perspective by the degree of impatience combined with consumption growth. In our book, stock prices are characterized by their expected discounted cash flows.

Date: 2019
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DOI: 10.1007/978-3-030-05427-4_9

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