When Do Stock Market Booms Occur? The Macroeconomic and Policy Environments of 20th Century Booms

FRB of St. Louis Working Paper No. 2006-051A

47 Pages Posted: 13 Sep 2006

See all articles by Michael D. Bordo

Michael D. Bordo

Rutgers University, New Brunswick - Department of Economics; National Bureau of Economic Research (NBER)

David C. Wheelock

Federal Reserve Bank of St. Louis - Research Division

Date Written: September 2006

Abstract

This paper studies the macroeconomic conditions and policy environments under which stock market booms occurred among ten developed countries during the 20th Century. We find that booms tended to occur during periods of above-average growth of real output, and below-average and falling inflation. We also find that booms often ended within a few months of an increase in inflation and monetary policy tightening. The evidence suggests that booms reflect both real macroeconomic phenomena and monetary policy, as well as the extant regulatory environment.

Keywords: Monetary policy, stock market booms

JEL Classification: E30, E52, G18, N10, N20

Suggested Citation

Bordo, Michael D. and Wheelock, David C., When Do Stock Market Booms Occur? The Macroeconomic and Policy Environments of 20th Century Booms (September 2006). FRB of St. Louis Working Paper No. 2006-051A. Available at SSRN: https://ssrn.com/abstract=929573 or http://dx.doi.org/10.2139/ssrn.929573

Michael D. Bordo (Contact Author)

Rutgers University, New Brunswick - Department of Economics ( email )

New Brunswick, NJ
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

David C. Wheelock

Federal Reserve Bank of St. Louis - Research Division ( email )

P.O. Box 442
St. Louis, MO 63166-0442
United States

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