Download This PaperFalling Interest Rates and the Secular Rise in U.S. Common Stocks
10 Pages Posted: 16 Oct 2020
Date Written: August 26, 2020
Abstract
This paper is a data-based analysis of how and why U.S. common stocks secularly rose in concert with falling interest rates. It finds that falling rates explained 76% of the increase in stocks between 1982 and 2019. Growth in financial wealth significantly outpaced growth in the real economy and jobs, fortuitously benefitting financial investors but not working families. Economists term this “asset price inflation.
Keywords: asset price inflation, exuberance for stocks, global savings glut, Shiller CAPE Ratio
JEL Classification: G1, G12, G32
Suggested Citation: Suggested Citation
Scott, William, Falling Interest Rates and the Secular Rise in U.S. Common Stocks (August 26, 2020). Available at SSRN: https://ssrn.com/abstract=3681508 or http://dx.doi.org/10.2139/ssrn.3681508
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