| OCR Text |
Show 107 has case in the effect of interest rates been the The pricing and he is process said dominant past months. intrinsic an the on of part stock market Keran'sl that the long-term interest rates factors in the stock article, the are price formation. In discuss- '( ing Keran's aricle, the main idea is not explicitly to ._. discuss his extract from his have price determination. on At his analysis this of how writing point I prices what effect illustrate determined but to are monetary policies the chart article which will show my position. Changes in nominal money affect affect rates of changes may in appearing (See Figure '2.) in real money which interest which in turn affect the price of stocks. .in First, cuss the doing, I considering relation of would like its to t'_ons. Keran".pres ented The of effect real rate is on is a function of is measured by the change let and while us dis In so the set of of int eres of change liquidity associated with the change in GNP, rate result plus expected (rate of) a of money, interest rates. the deriving observed rate of interest interest role briefly through go in the in t. the real rate prices. growth. The ,Growth is short-run in the money stock. equa- liquidity Consequently, lMichael Keran, "Expectations, Money and the Stock Market," Monthly Revi·ew Federal Res erve Bank of St. Louis, January, 1971, pp. 16-31 |
