Stock Market Volatility and Corporate Investment

Despite concerns are often voiced on the so called "excess volatility" of the stock market, little is known about the implications of market volatility for the real economy. This paper examines whether the stock market volatility affects real fixed investment. The empirical evidence obtain...

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Main Author: Hu, Zuliu
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 1995, 1995
Series:IMF Working Papers; Working Paper
Subjects:
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Collection: International Monetary Fund - Collection details see MPG.ReNa
Summary:Despite concerns are often voiced on the so called "excess volatility" of the stock market, little is known about the implications of market volatility for the real economy. This paper examines whether the stock market volatility affects real fixed investment. The empirical evidence obtained from the US data shows that market volatility has independent effects on investment over and above that of stock returns. Volatility and its changes are negatively related to investment growth. To the extent volatility depresses fixed capital formation and hence future income growth, the results suggest the desirability of reducing stock market volatility
Physical Description:26 p.
ISBN:9781451852585
1451852584