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Title:The Power Law and Dividend Yields PDF Logo
Authors:Lüders, Erik
Lüders-Amann, Inge
Schröder, Michael
Issue Date:2004
Series/Report no.:ZEW Discussion Papers 04-51
Abstract:Recent research suggests that the power law is one of the most universal laws in nature and it also seems to work quite fine in economics and finance. In this paper we show that the power law explains extremely well the relationship between the value of broad-based market indices and their dividends. We also show that this relationship is consistent with declining relative risk aversion of the representative investor. Hence, the power law has a solid economic foundation.
Subjects:Power law
stock prices
dividends
co-integration
JEL:E44
G15
G12
Document Type:Working Paper
Appears in Collections:ZEW Discussion Papers
Publikationen von Forscherinnen und Forschern des ZEW

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