But, it is hard to believe that all the movements in asset prices witnessed in recent years are well-rooted in changes to the underlying productivity of those assets. A telling reason for skepticism is the behavior of stock prices since the late 1990s.
What information on productivity or productivity growth can account for, first, the near-tripling of share prices during the late 1990s and, then, the retrenchment of prices in 2000 and 2001? It would appear that a portion of past swings in net worth has reflected behavior based on something other than well-founded assessments of changes in the underlying productive potential of existing capital.