Financial Market Shocks and the Macroeconomy

We are grateful to Pietro Veronesi (the editor) and an anonymous referee for insightful and constructive comments. We also thank Rajesh Aggarwal, Ravi Anshuman, Michael Brennan, Charles Calomiris, Larry Glosten, Wei Jiang, Charles Jones, Jayant Kale, Andrea Prat, Raghu Rau, Pedro Saffi, Tano Santos, Dick Stapleton, Alex Taylor, Paul Tetlock, and seminar participants at Columbia University, Indian Institute of Management (Bangalore), the University of Cambridge, and the University of Manchester, for valuable comments. All errors are solely ours. Part of this work was completed when Subrahmanyam was a Pembroke Visiting Scholar at Judge Business School, University of Cambridge. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.