TY  - JOUR
AU  - Greenwood,Jeremy
AU  - Jovanovic,Boyan
TI  - The IT Revolution and the Stock Market
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6931
PY  - 1999
Y2  - February 1999
UR  - http://www.nber.org/papers/w6931
L1  - http://www.nber.org/papers/w6931.pdf
N1  - Author contact info:
Jeremy Greenwood
Department of Economics
University of Pennsylvania
3718 Locust Walk
McNeil Building, Rm 160
Philadelphia, PA 19104-6297
Tel: 215/898-1505
Fax: 215/746-2947
E-Mail: do-not-use@jeremygreenwood.net

Boyan Jovanovic
New York University
Department of Economics
19 W. 4th Street, 6th Floor
New York, NY  10012
Tel: 212/998-8953
Fax: 212/995-4186
E-Mail: Boyan.Jovanovic@nyu.edu
AB  - 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).
ER  -