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Article: Stock market volatility.(Industry Overview)
- Article from:
- FRBSF Economic Letter
- Article date:
- October 25, 2002
- Author:
CopyrightCOPYRIGHT 2002 Federal Reserve Bank of San Francisco. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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In recent months, it has not been unusual to see the value of major stock indexes, such as the S&P 500, change by as much as 3% in a single day. Unfortunately for many investors, the general direction of those changes has been downward. For some researchers in financial economics, the interesting question is: what drives the volatility itself? The evidence they have uncovered over the last few decades sheds light on the efficiency of the stock market and points to some important implications for economic forecasters and investors. In particular, it suggests that the degree of stock market volatility can help forecasters predict the path of the economy's growth; ...