Pastor, Lubos. <br/><br/>
Technological Revolutions and Stock Prices / 
Lubos Pastor, Pietro Veronesi. 
 - Cambridge, Mass.  National Bureau of Economic Research  2005. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w11876 .
 - Working Paper Series (National Bureau of Economic Research)  no. w11876. .
<br/><br/> December 2005. 
<br/><br/> We develop a general equilibrium model in which stock prices of innovative firms exhibit "bubbles" during technological revolutions. In the model, the average productivity of a new technology is uncertain and subject to learning. During technological revolutions, the nature of this uncertainty changes from idiosyncratic to systematic. The resulting "bubbles" in stock prices are observable ex post but unpredictable ex ante, and they are most pronounced for technologies characterized by high uncertainty and fast adoption. We find empirical support for the model's predictions in 1830-1861 and 1992-2005 when the railroad and Internet technologies spread in the United States. 
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