TY  - JOUR
AU  - Gârleanu,Nicolae B.
AU  - Panageas,Stavros
AU  - Yu,Jianfeng
TI  - Technological Growth and Asset Pricing
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15340
PY  - 2009
Y2  - September 2009
UR  - http://www.nber.org/papers/w15340
L1  - http://www.nber.org/papers/w15340.pdf
N1  - Author contact info:
Nicolae B. Garleanu
Haas School of Business
F628
University of California, Berkeley
Berkeley, CA 94720
Tel: (1) 510 642 3421
Fax: (1) 510 643 1420
E-Mail: garleanu@haas.berkeley.edu

Stavros Panageas
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL, 60637
Tel: (773) 834 4711
E-Mail: stavros.panageas@chicagobooth.edu

Jianfeng Yu
University of Minnesota
321 19th Avenue South, Suite 3-122
Minneapolis MN 55455
Tel: 612-625-5498
E-Mail: jianfeng@umn.edu
AB  - In this paper we study the implications of general-purpose technological growth for asset prices. The model features two types of shocks: "small", frequent, and disembodied shocks to productivity and "large" technological innovations, which are embodied into new vintages of the capital stock. While the former affect the economy on impact, the latter affect the economy with lags, since firms need to first adopt the new technologies through investment. The process of adoption leads to cycles in asset valuations and risk premia as firms convert the growth options associated with the new technologies into assets in place. This process can help provide a unified, investment-based view of some well documented phenomena such as the asset-valuation patterns around major technological innovations, the countercyclical behavior of returns, the lead-lag relationship between the stock market and output, and the increasing patterns of consumption-return correlations over longer horizons.
ER  -