Market Shocks in the G7 Countries

This paper investigates the impact of unanticipated increases in share prices on economic activity G7 countries — Canada, France, Germany, Italy, Japan, United Kingdom, and States. Share contain information about current future state economy. We investigate whether different measures optimism, all which increase prices, affect key macroeconomic variations. In particular, do bouts optimism stimulate growth? If so, are booms sustained for a long period time? To answer our research questions, we use structural vector autoregression models, three identification strategies. address interdependence between interest rate shocks stock market shocks, using short-run long-run restrictions, as Bjørnland Leitemo (J Monet Econ 56(2): 275–282, 2009). pure sign Uhlig 52(2): 381–419, 2005). also implement theory numerical algorithms zero recently developed by Arias et al. (Econometrica 86(2): 685–720, 2018).