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The generation of stock market cycles
Author(s) -
Bolten Steven E.,
Weigand Robert A.
Publication year - 1998
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1998.tb01608.x
Subject(s) - business cycle , stock market , economics , dividend , earnings , stock market bubble , stock (firearms) , financial economics , econometrics , monetary economics , finance , macroeconomics , biology , mechanical engineering , paleontology , horse , engineering
This paper demonstrates that the relation between stock market and business cycle dynamics can be conceptualized using a dividend discount model. The interaction of changes in earnings and interest rates throughout the economic cycle are shown to cause changes in the level of stock prices. This implies that monitoring and forecasting these factors can help explain and possibly predict stock price behavior over time.