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Stock Prices and Output Growth: An Examination of the Credit Channel

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When stock market values fall, we know it means investors expect lower economic growth in the future. But can stock market declines actually affect future growth? There is some evidence that they can—through the credit channel.

When stock market values fall, we know it means investors expect lower economic growth in the future. But can stock market declines actually affect future growth? There is some evidence that they can—through the credit channel.


Suggested citation: Carlstrom, Charles T., Timothy S. Fuerst, and Vasso P. Ioannidou, 2002. "Stock Prices and Output Growth: An Examination of the Credit Channel," Federal Reserve Bank of Cleveland, Economic Commentary, 08.15.2002.

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