Left Behind: Creative Destruction, Inequality, and the Stock Market
We develop a general equilibrium model of asset prices in which benefits of technological innovation are distributed asymmetrically. Financial market participants do not capture all economic gains from innovation even when they own shares in innovating firms. Such gains accrue partly to the innovato...
| Main Authors: | , , |
|---|---|
| Other Authors: | |
| Format: | Article |
| Language: | English |
| Published: |
University of Chicago Press
2021
|
| Online Access: | https://hdl.handle.net/1721.1/130433 |
| _version_ | 1811069132975636480 |
|---|---|
| author | Kogan, Leonid Papanikolaou, Dimitris Stoffman, Noah |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Kogan, Leonid Papanikolaou, Dimitris Stoffman, Noah |
| author_sort | Kogan, Leonid |
| collection | MIT |
| description | We develop a general equilibrium model of asset prices in which benefits of technological innovation are distributed asymmetrically. Financial market participants do not capture all economic gains from innovation even when they own shares in innovating firms. Such gains accrue partly to the innovators, who cannot sell claims on proceeds from their future ideas. We show how the resulting inequality among agents can give rise to a high risk premium on the aggregate stock market, return comovement and average return differences among firms, and the failure of traditional representative agent asset pricing models to account for cross-sectional differences in risk premia. |
| first_indexed | 2024-09-23T08:06:14Z |
| format | Article |
| id | mit-1721.1/130433 |
| institution | Massachusetts Institute of Technology |
| language | English |
| last_indexed | 2024-09-23T08:06:14Z |
| publishDate | 2021 |
| publisher | University of Chicago Press |
| record_format | dspace |
| spelling | mit-1721.1/1304332022-09-23T10:56:04Z Left Behind: Creative Destruction, Inequality, and the Stock Market Kogan, Leonid Papanikolaou, Dimitris Stoffman, Noah Sloan School of Management We develop a general equilibrium model of asset prices in which benefits of technological innovation are distributed asymmetrically. Financial market participants do not capture all economic gains from innovation even when they own shares in innovating firms. Such gains accrue partly to the innovators, who cannot sell claims on proceeds from their future ideas. We show how the resulting inequality among agents can give rise to a high risk premium on the aggregate stock market, return comovement and average return differences among firms, and the failure of traditional representative agent asset pricing models to account for cross-sectional differences in risk premia. 2021-04-09T20:01:26Z 2021-04-09T20:01:26Z 2020-01 2021-04-06T18:42:12Z Article http://purl.org/eprint/type/JournalArticle 0022-3808 1537-534X https://hdl.handle.net/1721.1/130433 Kogan, Leonid et al. "Left Behind: Creative Destruction, Inequality, and the Stock Market." Journal of Political Economy 128, 3 (March 2020): 855-906 © 2020 by The University of Chicago en http://dx.doi.org/10.1086/704619 Journal of Political Economy Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use. application/pdf University of Chicago Press University of Chicago Press |
| spellingShingle | Kogan, Leonid Papanikolaou, Dimitris Stoffman, Noah Left Behind: Creative Destruction, Inequality, and the Stock Market |
| title | Left Behind: Creative Destruction, Inequality, and the Stock Market |
| title_full | Left Behind: Creative Destruction, Inequality, and the Stock Market |
| title_fullStr | Left Behind: Creative Destruction, Inequality, and the Stock Market |
| title_full_unstemmed | Left Behind: Creative Destruction, Inequality, and the Stock Market |
| title_short | Left Behind: Creative Destruction, Inequality, and the Stock Market |
| title_sort | left behind creative destruction inequality and the stock market |
| url | https://hdl.handle.net/1721.1/130433 |
| work_keys_str_mv | AT koganleonid leftbehindcreativedestructioninequalityandthestockmarket AT papanikolaoudimitris leftbehindcreativedestructioninequalityandthestockmarket AT stoffmannoah leftbehindcreativedestructioninequalityandthestockmarket |