I’ve posted Entry #288 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Recent Research Argues That the Stock Crash of 2008 Caused the Recession (But Shiller Disagrees).
Juicy Excerpt: Jordan Weissmann explains that: “UCLA economist Roger Farmer has been arguing for some time that the stock market does, in fact, sway the real economy. The man is generally something of a contrarian but is also respected for his “fearsome math skills and deep understanding of how modern [economic] models work,’ as Bloomberg View’s Noah Smith has put it. Last year, the professor published a paper titled “The Stock Market Crash Really Did Cause the Great Recession.”
However, research by Robert Shiller, Karl Case and John Quigley throws cold water on the idea, finding “at best weak evidence of a link between stock market wealth and consumption.”