The IT Revolution and the Stock Market
AbstractA new technology or product is often developed by the single entrepreneur. Whether he reaches the public offering stage or is acquired by a listed firm it takes time for the innovator to add value to the stock market. Indeed first, reduce the market's value because some firms -- usually large or old -- will cling to old technologies that have lost their momentum. This paper argue that (a) the market declined in the late 1960s because it felt that the old technologies either had lost their momentum or would give way to IT, and that (b) IT innovators boosted the stock market's value only in the 1980s. If the stock market provides a forecast of future events, then the recent dramatic upswing represents a rosy estimate about growth in future profits for the economy. This translates into a forecast of higher output and productivity growth, holding other things equal (such as capital's share of income).
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6931.
Date of creation: Feb 1999
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Other versions of this item:
- Greenwood, J. & Jovanovic, B., 1999. "The IT Revolution and the Stock Market," RCER Working Papers 460, University of Rochester - Center for Economic Research (RCER).
- Greenwood, J. & Jovanovic, B., 1999. "The IT Revolution and the Stock Market," Working Papers 99-02, C.V. Starr Center for Applied Economics, New York University.
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
- G1 - Financial Economics - - General Financial Markets
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