Interactions between the real economy and the stock market



Professorship/Faculty: Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftspolitik 
Author(s): Westerhoff, Frank H.  
Other Contributing Persons: Stübben, Felix
Corporate Body: BERG (Bamberg Economic Research Group)
Publisher Information: Bamberg : opus
Year of publication: 2012
Pages / Size: 32 S. : graph. Darst.
ISBN: 978-3-931052-95-9
Series ; Volume: BERG working paper series  ; 84
Year of first publication: 2011
Language(s): English
URN: urn:nbn:de:bvb:473-opus4-24161
Document Type: Workingpaper
Abstract: 
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.
SWD Keywords: Gütermarkt ; Aktienmarkt ; Börsenspekulation ; Dynamisches Modell ; Online-Publikation
Keywords: Goods market, stock market, heterogeneous speculators, stability analysis, complex dynamics
DDC Classification: 330 Economics 
RVK Classification: QK 650   
URI: https://fis.uni-bamberg.de/handle/uniba/1019
Release Date: 18. December 2012

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