The Dynamic Interaction between Equity Prices and Supply Shocks

Arbeitspapier

This paper develops a theory of medium term share price movements under slow adjustment in the labour market relative to the share market and perfect foresight in the share market. The model seeks to explain the slow movements in real share prices that have been observed in the OECD countries over the past 130 years. Using 130 years of data for the OECD countries, the empirical evidence indicates that movements in factor shares are crucial determinants of medium-term movements in share prices.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: EPRU Working Paper Series ; No. 2003-12

Classification and Topics

• Classification: Wirtschaft ; Asset Pricing; Trading Volume; Bond Interest Rates ; Price Level; Inflation; Deflation ; Interest Rates: Determination, Term Structure, and Effects
• Subject: share prices ; supply shocks ; rational expectations ; Börsenkurs ; Aktienmarkt ; Gesamtwirtschaftliches Angebot ; Schock ; Industriestaaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Madsen, Jakob B.
• Event: Veröffentlichung
• (who): University of Copenhagen, Economic Policy Research Unit (EPRU)
• (where): Copenhagen
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/82062
• Last update: 10.03.2025, 11:45 AM CET