TY  - JOUR
AU  - Pastor,Lubos
AU  - Veronesi,Pietro
TI  - Technological Revolutions and Stock Prices
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11876
PY  - 2005
Y2  - December 2005
UR  - http://www.nber.org/papers/w11876
L1  - http://www.nber.org/papers/w11876.pdf
N1  - Author contact info:
Lubos Pastor
University of Chicago
Booth School of Business
5807 South Woodlawn Ave
Chicago, IL  60637
Tel: 773/834-4080
Fax: NA
E-Mail: lubos.pastor@chicagobooth.edu

Pietro Veronesi
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL  60637
Tel: 773/702-6348
Fax: 773/702-0458
E-Mail: pietro.veronesi@chicagobooth.edu
AB  - 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.
ER  -