NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Stock Market Boom and the Productivity Gains of the 1990s

Urban Jermann, Vincenzo Quadrini

NBER Working Paper No. 9034
Issued in June 2002
NBER Program(s):   EFG

Together with a sense of entering a New Economy, the US experienced in the second half of the 1990s an economic expansion, a stock market boom, a financing boom for new firms and productivity gains. In this paper, we propose an interpretation of these events within a general equilibrium model with financial frictions and decreasing returns to scale in production. We show that the mere prospect of high future productivity growth can generate sizable gains in current productivity, as well as the other above mentioned events.

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Document Object Identifier (DOI): 10.3386/w9034

Published: Jermann, U. J. and V. Quadrini. "Stock Market Boom and the Productivity Gains of the 1990s." Journal of Monetary Economics (March 2007): 413-432. citation courtesy of

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