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Interactions between the real economy and the stock market

  • We develop a simple behavioral macro model to study interactions between the real economy and the stock market. The real economy is represented by a Keynesian goods market approach while the setup for the stock market includes heterogeneous speculators. Using a mixture of analytical and numerical tools we find, for instance, that speculators may create endogenous boom-bust dynamics in the stock market which, by spilling over into the real economy, can cause lasting fluctuations in economic activity. However, fluctuations in economic activity may, by shaping the firms’ fundamental values, also have an impact on the dynamics of the stock market.

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Institutes:Fakultät Sozial- und Wirtschaftswissenschaften / Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftspolitik
Author:Frank Westerhoff
Contributer:Felix Stübben
Publishing Institution:BERG (Bamberg Economic Research Group)
Place of publication:Bamberg
Year of publication:2012
Pages / Size:32 S. : graph. Darst.
Collections (Serial Number):BERG working paper series (84)
Year of first publication:2011
Source/Other editions:zuerst erschienen im BERG-Verlag, 2011
To order a print copy:http://www.uni-bamberg.de/vwl/forschung/wps/
SWD-Keyword:Gütermarkt ; Aktienmarkt ; Börsenspekulation ; Dynamisches Modell ; Online-Publikation
Keywords:Goods market, stock market, heterogeneous speculators, stability analysis, complex dynamics
DDC-Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
RVK-Classification:QK 650
Document Type:Working paper
Publishing Institution:Otto-Friedrich-Universität Bamberg
Release Date:2013/01/25