The IT Revolution and the Stock Market / Jeremy Greenwood, Boyan Jovanovic.

Format:

Book

Author/Creator:

Greenwood, Jeremy.

Contributor:

National Bureau of Economic Research.

Jovanovic, Boyan.

Series:

Working Paper Series (National Bureau of Economic Research) no. w6931.

NBER working paper series no. w6931

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1999.

Summary:

A 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).

Notes:

Print version record

February 1999.