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| Title: | | The Power Law and Dividend Yields  |
| 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: | | Publikationen von Forscherinnen und Forschern des ZEW ZEW Discussion Papers
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