Wealth Effects and the New Economy

May 1, 2001

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Format: Chicago

Torsten M Sloek, and Hali J Edison. Wealth Effects and the New Economy, (USA: International Monetary Fund, 2001) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper investigates if there is a different impact from changes in "new" and "old" economy stock valuations on private consumption. Estimating a reduced-form VAR for seven OECD countries for the 1990s, it is found that the impact from changes in old economy stock valuations on consumption is in general larger in the United States, Canada, and United Kingdom than in continental Europe. Furthermore, the impact from changes in new economy valuations to consumption is roughly the same in the United States, Canada, and United Kingdom and in continental Europe. Finally, the results suggest that in continental Europe the impact on consumption from changes in the valuation of new economy stocks is bigger than from the old economy stocks, whereas for the United States, Canada, and United Kingdom the impact is more or less the same between the two sectors.

Subject: Asset prices, Consumption, Financial institutions, Financial markets, Market capitalization, National accounts, Prices, Stock markets, Stocks

Keywords: Asset prices, Capitalization, Consumption, Europe, Market capitalization, New economy, North America, Stock, Stock market capitalization, Stock markets, Stock markets in the 1990s, Stocks, TMT market capitalization, TMT sector, TMT stock valuation, Wealth, Wealth effect, Wealth effects, WP

Publication Details

Pages:

22
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/077
Stock No:

WPIEA0772001
ISBN:

9781451849998
ISSN:

1018-5941

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