TY - JOUR
T1 - The information-technology revolution and the stock market
T2 - Evidence
AU - Hobijn, Bart
AU - Jovanovic, Boyan
N1 - Copyright:
Copyright 2017 Elsevier B.V., All rights reserved.
PY - 2001/12
Y1 - 2001/12
N2 - Why did the stock market decline so much in the early 1970's and remain low until the early 1980's? We argue that it was because information technology arrived on the scene and the stock-market incumbents of the day were not ready to implement it. Instead, new firms would bring in the new technology after the mid-1980's. Investors foresaw this in the early 1970's and stock prices fell right away. In our model, new capital destroys old capital, but with a lag. The prospect of this causes the value of the old capital to fall right away. (JEL G12, O16, O33).
AB - Why did the stock market decline so much in the early 1970's and remain low until the early 1980's? We argue that it was because information technology arrived on the scene and the stock-market incumbents of the day were not ready to implement it. Instead, new firms would bring in the new technology after the mid-1980's. Investors foresaw this in the early 1970's and stock prices fell right away. In our model, new capital destroys old capital, but with a lag. The prospect of this causes the value of the old capital to fall right away. (JEL G12, O16, O33).
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U2 - 10.1257/aer.91.5.1203
DO - 10.1257/aer.91.5.1203
M3 - Article
AN - SCOPUS:0001520309
SN - 0002-8282
VL - 91
SP - 1203
EP - 1220
JO - American Economic Review
JF - American Economic Review
IS - 5
ER -