[PEN-L:3801] Re: stock market & investment

[ROSSERJB@xxxxxxx]

To Doug H.
     Even if Mork, et al are correct it does not necessarily
undo the broader JMK story, even if his precise remarks about
the stock market may be undermined.
     The broader story is that the state of "long-term expectation"
or animal spirits drives investment.  That also shows up in
the stock market, but it operates on real capital investment
independently, at least according to JMK in the GT.  This shows
up in the dependence on long-run expectations of both the
marginal efficiency of capital and the speculative demand for
money, with its implications for the rate of interest.  A
discontinuous collapse in long-run expectations ("animal spirits")
will discontinously shift both of those and real capital investment
can collapse (GT, pps. 170-71, 207, 245-249).
     I have not read Mork, et al, and they may have a point for
post-1945 data, but certainly during the Great Depression, both
the stock market and real capital investment were way down.
Barkley Rosser