Testing for a New Economy in the 1990s

26 Pages Posted: 21 Dec 2002

See all articles by Ray C. Fair

Ray C. Fair

Yale University - Cowles Foundation; Yale School of Management - International Center for Finance

Date Written: March 2003

Abstract

This paper examines how much structural change there was in the U.S. economy in the last half of the 1990s. The results are consistent with the hypothesis that there was only one major structural change, namely the huge increase in stock prices relative to earnings. All other large changes can be explained by this change. There is no obvious reason for the large increase in stock prices relative to earnings. Increased productivity growth does not appear to be an answer since the data show that there was only a modest increase in long run productivity growth in the last half of the 1990s. Also, earnings growth and the share of earnings in the economy were not unusually large.

Keywords: New Economy, Stability Tests

JEL Classification: E10, C52

Suggested Citation

Fair, Ray C., Testing for a New Economy in the 1990s (March 2003). Yale ICF Working Paper No. 02-48; Cowles Foundation Discussion Paper No. 1388. Available at SSRN: https://ssrn.com/abstract=363560

Ray C. Fair (Contact Author)

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States
203-432-3715 (Phone)
203-432-6167 (Fax)

HOME PAGE: http://fairmodel.econ.yale.edu

Yale School of Management - International Center for Finance ( email )

Box 208200
New Haven, CT 06520
United States
203-432-3715 (Phone)
203-432-6167 (Fax)

HOME PAGE: http://fairmodel.econ.yale.edu

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
431
Abstract Views
3,770
rank
70,425
PlumX Metrics