This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

American Economic Review: Vol. 99 No. 4 (September 2009)

AER Volume. 99, Issue 4 | leftPrevious ArticleNext Articleright

Expand

Quick Tools:

Print Article Summary Email Link to this Article Export Citation
Sign up for Email Alerts Follow us on Twitter

Explore:

AER - All Issues

AER Forthcoming Articles

Technological Revolutions and Stock Prices

Article Citation

Pástor, Ľuboš, and Pietro Veronesi. 2009. "Technological Revolutions and Stock Prices." American Economic Review, 99(4): 1451-83.

DOI: 10.1257/aer.99.4.1451

Abstract

We develop a general equilibrium model in which stock prices of innovative firms exhibit "bubbles" during technological revolutions. In the model, the average productivity of a new technology is uncertain and subject to learning. During technological revolutions, the nature of this uncertainty changes from idiosyncratic to systematic. The resulting bubbles in stock prices are observable ex post but unpredictable ex ante, and they are most pronounced for technologies characterized by high uncertainty and fast adoption. We find empirical support for the model's predictions in 1830-1861 and 1992-2005 when the railroad and Internet technologies spread in the United States. (JEL G12, L86, L92, N21, N22, N71, N72)

Article Full-Text Access

Full-text Article

Additional Materials

Download Data Set (664.13 KB) | Online Appendix (298.48 KB)

Authors

Pástor, Ľuboš (U Chicago)
Veronesi, Pietro (U Chicago)

JEL Classifications

G12: Asset Pricing; Trading volume; Bond Interest Rates
L86: Information and Internet Services; Computer Software
L92: Railroads and Other Surface Transportation
N21: Economic History: Financial Markets and Institutions: U.S.; Canada: Pre-1913
N22: Economic History: Financial Markets and Institutions: U.S.; Canada: 1913-
N71: Economic History: Transport, Trade, Energy, Technology, and Other Services: U.S.; Canada: Pre-1913
N72: Economic History: Transport, Trade, Energy, Technology, and Other Services: U.S.; Canada: 1913-


American Economic Review



AEA Member Login:


Quick Tools:

Email Link to this Issue

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

AER - All Issues

AER - Forthcoming Articles

AEA Journals

Virtual Field Journals

AEAweb | AEA Journals | Contact Us