[OPE-L:5412] Re: Re: Re: Re: Re: Re: the bursting bubble and the U.S. working class

From: Allin Cottrell (cottrell@wfu.edu)
Date: Tue Apr 24 2001 - 14:25:10 EDT

On Wed, 25 Apr 2001, Steve Keen wrote:

> I think this may raise issues of the role of econometrics in economics,
> which is a large topic! But just briefly, your model doesn't appear to
> include a term for tcm10y.

It includes tcm10y only as the discount factor for "pvprof", the
capitalized value of the current profits stream.

> I would be curious to see what results you got from a comparison
> of this long term bond yield to the implied dividend yield of a
> broad portfolio of stocks (such as the S&P500) plus the implied
> average share price appreciation.

Note that my data do show a somewhat "excessive" valuation of stocks
relative to the estimated equilibrium, for the second half of 1999
through 2000 (perhaps I overstated by asking "What bubble?").  But
this was on the rebound after a rather deep trough in 1993.


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