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| Author: | McGrattan, E.R. Prescott, E.C. |
| Title: | The 1929 stock market: Irving Fisher was right |
| Journal: | International Economic Review
2004 : NOV, VOL. 45:4, p. 991-1009 |
| Index terms: | Growth theory Share prices Stock markets |
| Language: | eng |
| Abstract: | Many stock market analysts think that at the time of the crash, in 1929, the stocks were overvalued. Irving Fisher argued just before the crash that fundamentals were strong and the stock market was undervalued. This paper uses growth theory to estimate the fundamental value of corporate equity and compare it to actual stock valuations. The estimate is based on values of productive corporate capital, both tangible and intangible, and tax rates on corporate income and distributions. |
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