TY  - JOUR
AU  - Beaudry, Paul
AU  - Portier, Franck
TI  - Stock Prices, News and Economic Fluctuations
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10548
PY  - 2004
Y2  - June 2004
DO  - 10.3386/w10548
UR  - http://www.nber.org/papers/w10548
L1  - http://www.nber.org/papers/w10548.pdf
N1  - Author contact info:
Paul Beaudry
Bank of Canada
234 Wellington Street
Ottawa, ON, K1A 0G9
CANADA
E-Mail: Paul.Beaudry@ubc.ca

Franck Portier
Department of Economics
University College London
30 Gordon Street
WC1H 0AX London
United Kingdom
E-Mail: f.portier@ucl.ac.uk
M1  - published as Paul Beaudry, Franck Portier. "Stock Prices, News and Economic Fluctuations ," in Dale Jorgenson, Takeo Hoshi, and Masahiro Kuroda, organizers, "Enhancing Productivity (NBER-CEPR-TCER-Keio conference)" Journal of the Japanese and International Economies, Volume 19, issue 4 (Academic Press) (2005)

AB  - In this paper we show that the joint behavior of stock prices and TFP favors a view of business cycles driven largely by a shock that does not affect productivity in the short run -- and therefore does not look like a standard technology shock -- but affects productivity with substantial delay -- and therefore does not look like a monetary shock. One structural interpretation we suggest for this shock is that it represents news about future technological opportunities which is first captured in stock prices. We show that this shock causes a boom in consumption, investment and hours worked that precede productivity growth by a few years. Moreover, we show that this shock explains about 50\% of business cycle fluctuations.
ER  -