The Fed Model: A Note
Javier Estrada
IESE Business School
November 2005
Abstract:
The negative relationship between market P/E ratios and government bond yields seems to have become conventional wisdom among practitioners. Both (limited) empirical evidence and a (misleading) suggestion that the model originated in the Fed are used to support the model's plausibility. The evidence in this note, from 20 international markets, seriously questions the wide acceptance and use of this model.
Number of Pages in PDF File: 11
Keywords: Fed model, stock pricing, p/e ratios
JEL Classification: G11, G12, G15
working papers series
Suggested Citation
Estrada, Javier, The Fed Model: A Note (November 2005). Available at SSRN: http://ssrn.com/abstract=841787 or http://dx.doi.org/10.2139/ssrn.841787
