Does Innovation Cause Stock Market Runups? Evidence from the Great Crash

  title={Does Innovation Cause Stock Market Runups? Evidence from the Great Crash},
  author={Tom Nicholas},
  journal={The American Economic Review},
  • T. Nicholas
  • Published 1 August 2008
  • Economics, Business
  • The American Economic Review
This article examines the stock market's changing valuation of corporate patentable assets between 1910 and 1939. It shows that the value of knowledge capital increased significantly during the 1920s compared to the 1910s as investors responded to the quality of technological inventions. Innovation was an important driver of the late 1920s stock market runup, and the Great Crash did not reflect a significant revaluation of knowledge capital relative to physical capital. Although substantial… 

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