New Economy Stock Valuations and Investment in the 1990s

May 1, 2001

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Format: Chicago

Torsten M Sloek, and Hali J Edison. New Economy Stock Valuations and Investment in the 1990s, (USA: International Monetary Fund, 2001) accessed December 21, 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 whether there is a different impact from changes in "new" and "old" economy stock valuations on private investment for seven OECD economies. A vector autoregressive model is estimated for each individual country, using quarterly data over the period 1990-2000. We find that the impact from changes in valuations of new economy stocks to investment is roughly the same in North America and United Kingdom as in continental Europe. By contrast, the impact from changes in old economy stock valuations on investment is, in general, larger in North America and United Kingdom than in continental Europe. Finally, the results suggest that in continental Europe the impact on investment from changes in the valuation of new economy stocks is bigger than for old economy stocks, whereas for North America and United Kingdom the impact is more similar.

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

Keywords: Asset prices, Europe, Investment, Investment equation, Investment literature, Market capitalization, Market equity component, New economy, New economy activity, North America, Price, Price index, Private investment, Real investment, Short interest, Stock, Stock markets, Stocks, TMT market, TMT stock market capitalization, TMT stock valuation, United States financial system firm, Valuation measure, WP

Publication Details

Pages:

17
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/078
Stock No:

WPIEA0782001
ISBN:

9781451850109
ISSN:

1018-5941

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