Academic journal article NBER Reporter

Economic Fluctuations Research Meeting

Academic journal article NBER Reporter

Economic Fluctuations Research Meeting

Article excerpt

Economic Fluctuations Research Meeting

Over 100 economists attended a research meeting of the NBER's Program in Economic Fluctuations in Cambridge on July 13. The program, organized by Research Associates Andrei Shleifer of the University of Chicago and Lawrence H. Summers of Harvard University, was:

Robert B. Barsky, NBER and University of Michigan,

and J. Bradford De Long, NBER and Harvard

University, "Why Have Stock Prices Fluctuated?"

Discussant: John Y. Campbell, NBER and Princeton


Knut Anton Mork, Vanderbilt University, and Hans

Terje Mysen and Oystein Olsen, Central Bureau of

Statistics, Norway, "Macroeconomic Responses

to Oil Price Increases and Decreases in Six OECD


Discussant: James Hamilton, University of Virginia

Lawrence M. Ausubel, Northwestern University,

"The Failure of Competition in the Credit Card


Discussant: Julio J. Rotemberg, NBER and MIT

Lawrence H. Summers, and Chris Carroll, MIT,

"Consumption Growth Parallels Income Growth: Some

New Evidence"

Discussant: Angus Deaton, NBER and Princeton


Steve J. Davis, University of Chicago, and John C.

Haltiwanger, University of Maryland, "Gross Job

Creation, Gross Job Destruction, and Employment


Discussant: Lawrence J. Katz, NBER and Harvard


Finn E. Kydland, Carnegie-Mellon University, and

Edward C. Prescott, University of Minnesota,

Cyclical Movements of the Labor Input and Its Real


Discussant: Kevin M. Murphy, NBER and University

of Chicago

Barsky and De Long reassess the relationship between stock prices and current and expected future dividends to determine whether market fluctuations are caused by shifts in fundamentals. Using data on dividends from 1900 to the present, they find that changes in the rationally expected growth rate of dividends may account for the sizable long-run variation in the dividend/price ratio. Movements in current and expected future dividends themselves also can explain much about the major historical long swings in stock prices. Previous conclusions to the contrary appear to depend on agents' assumed knowledge of certain features of the dividend process, but that knowledge was unavailable to investors at the time, Barsky and De Long believe.

Mork, Mysen, and Olsen analyze the correlations between oil price movements and GNP/GDP fluctuations for the United States, Canada, West Germany, Japan, the United Kingdom, and Norway. They find the clearest correlations for the United States, which also shows evidence of asymmetric responses to price increases and decreases. West Germany, Canada, and Norway show significant univariate, but not multivariate, correlations with oil price increases. …

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