Abstract
It has been one year since the global decline in stock prices and the principal cause remains a mystery. For some observers, the decline was a natural conclusion to an unfounded run-up in prices that occured especially during 1987, both in the United States and abroad. For example, the Brady Commission noted that “[Ails in the U.S., stock valuation in these [foreign] markets in 1987 began to rise above levels apparently justified by historical precedent or economic factors.” (Brady Commission [1988], p. 9) Indeed, in its study of stock price behavior in other markets, the section exploring the events of October 1987 is titled “Bursting the Bubble.”1
This paper was written while the authors were, respectively, Visiting Scholar and Research Officer at the Federal Reserve Bank of St. Louis. The conclusions are the authors’ and may not represent views of the Federal Reserve Bank of St. Louis or the Federal Reserve System.
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Dwyer, G.P., Hafer, R.W. (1990). Do Fundamentals, Bubbles, or Neither Determine Stock Prices? Some International Evidence. In: Dwyer, G.P., Hafer, R.W. (eds) The Stock Market: Bubbles, Volatility, and Chaos. Springer, Dordrecht. https://doi.org/10.1007/978-94-015-7881-3_3
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DOI: https://doi.org/10.1007/978-94-015-7881-3_3
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