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When do stock market booms occur? the macroeconomic and policy environments of 20th century booms

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Michael D. Bordo
David C. Wheelock

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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.

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Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 2006-051.

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Date of creation: 2006
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Handle: RePEc:fip:fedlwp:2006-051

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Keywords: Monetary policy Stock exchanges

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  1. Michael D. Bordo & David C. Wheelock, 2007. "Stock market booms and monetary policy in the twentieth century," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 91-122. [Downloadable!]
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