Approaches to Stock Market and Economic Activity
Our review of empirical approaches to study the interaction of stock prices and output -or in some cases stock prices, other financial variables and output—should be viewed as an introduction to modelling asset markets and economic activity. In Chap. 6 macro factors impacting stock prices are studied and a macro model that takes account of the interaction of macro variables and asset prices is introduced and empirical results reported. In Chap. 7 we explore the effects of new technology on asset prices and returns. Thereafter standard asset pricing models, in particular the capital asset pricing and intertemporal capital asset pricing models, are considered in detail and some estimation results are reported as well.
KeywordsInterest Rate Stock Market Stock Price Stock Return Asset Price
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