The Results of the Equity Premium January 2009 Survey
Posted: 8 Dec 2009
Date Written: January 1, 2009
As to the equity premium, the 2008 decline in the stock market has made economists mildly more bullish about future stock market rates of return. Typical expected equity premia are between 5% and 6% per year.
As to policy, the recommended fiscal stimulus is around $700 billion. A large majority feel that a financial bailout was necessary, that the government should stop equity dividends of banks that receive TARP funds, and that corporate governance is broken. A majority feels that the (Bush) government has spent the first half of the TARP funds badly. And a small majority feels that the government should force debt-to-equity conversions for banks that receive TARP funds.
Keywords: equity premium
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