Excess elasticity in the financial system? A study of how macroeconomic variables affect stock prices
Asset prices have had larger and more rapid increases since 1980 when compared to the post-war period, especially compared to the Bretton Woods period. In this thesis we test whether the excess elasticity view provides a plausible explanation for this change. The excess elasticity view, put forth by Borio and Disyatat (2011) and Borio and White (2003), argues that the financial system has become m