TITLE

Will Future Equity Risk Premium Decline?

AUTHOR(S)
Devaney, Michael
PUB. DATE
April 2008
SOURCE
Journal of Financial Planning;Apr2008, Vol. 21 Issue 4, p46
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The article provides a comparison of the macroeconomic factors that shaped the equity risk premium (ERP) before and after World War II. It examines the behavior of the historical equity risk premium for 1870-2002 using the returns on S&P 500 Index and the ten-year Treasury bond. It looks on several factors such as population demographics, monetary policy, and corporate dividend policy that are believed to influence the long-run ERP both in the U.S. and across countries in differing stages of economic development. It concludes that around World War II, monetary policy and productivity growth had influenced on ERP while dividend yield had stronger influence on ERP during the latter half of the century.
ACCESSION #
31527704

 

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