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Economic Commentary

Stock Prices and Output Growth: An Examination of 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.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit for updates.

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 8/15/2002.