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New Economy Stock Valuations and Investment in the 1990s

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  • Mr. Torsten M Sloek
  • Ms. Hali J Edison

Abstract

This paper investigates whether there is a different impact from changes in "new" and "old" economy stock valuations on private investment for seven OECD economies. A vector autoregressive model is estimated for each individual country, using quarterly data over the period 1990-2000. We find that the impact from changes in valuations of new economy stocks to investment is roughly the same in North America and United Kingdom as in continental Europe. By contrast, the impact from changes in old economy stock valuations on investment is, in general, larger in North America and United Kingdom than in continental Europe. Finally, the results suggest that in continental Europe the impact on investment from changes in the valuation of new economy stocks is bigger than for old economy stocks, whereas for North America and United Kingdom the impact is more similar.

Suggested Citation

  • Mr. Torsten M Sloek & Ms. Hali J Edison, 2001. "New Economy Stock Valuations and Investment in the 1990s," IMF Working Papers 2001/078, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2001/078
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    Cited by:

    1. Mr. Guy M Meredith, 2001. "Why Has the Euro Been so Weak?," IMF Working Papers 2001/155, International Monetary Fund.
    2. Mr. Torsten M Sloek & Ms. Hali J Edison, 2001. "Wealth Effects and the New Economy," IMF Working Papers 2001/077, International Monetary Fund.
    3. Laurent Clerk & Christian Pfister, 2003. "The role of financial factors in the transmission of monetary policy," BIS Papers chapters, in: Bank for International Settlements (ed.), Monetary policy in a changing environment, volume 19, pages 192-212, Bank for International Settlements.
    4. Weinert, Gunter & Wohlers, Eckhardt & Bruck, Christiane & Fieber, Eva-Ulrike & Hinze, Jorg & Kirchesch, Kai & Matthies, Klaus & Schumacher, Christian, 2003. "Zwischen Hoffen und Bangen - Konjunktur 2003," Report Series 26082, Hamburg Institute of International Economics.
    5. Weinert, Günter, 2003. "Zwischen Hoffen und Bangen - Konjunktur 2003," HWWA Reports 224, Hamburg Institute of International Economics (HWWA).

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