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The Fed Model: A Note

Javier Estrada

IESE Business School

November 2005

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

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Date posted: November 10, 2005  

Suggested Citation

Estrada, Javier, The Fed Model: A Note (November 2005). Available at SSRN: https://ssrn.com/abstract=841787 or http://dx.doi.org/10.2139/ssrn.841787

Contact Information

Javier Estrada (Contact Author)
IESE Business School ( email )
IESE Business School
Av. Pearson 21
Barcelona, 08034
+34 93 253 4200 (Phone)
+34 93 253 4343 (Fax)
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References:  11
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