New economic modeling explains why stock prices continue to climb during a pandemic

Despite facing huge economic uncertainty and the worst global health crisis in over a century, many economists and market participants have been puzzled by how quickly, and completely, stock prices have rebounded from their earlier crash. To help explain this phenomenon, SFU economist Lucas Herrenbrueck has published a white paper with economic modeling that illustrates how asset prices are high because of the pandemic, not despite of it.

While standard asset pricing models typically predict price declines during a recession, Herrenbrueck’s new modeling suggests that this is not the case during a recession caused by consumption restrictions, such as those currently being imposed around the world. Instead, the restrictions are actually reducing the value of having income right now, and thereby driving asset prices up, to an extent that has now overcome the initial impact caused by the recession.

More details and quotes are available on SFU News.

Herrenbrueck is available for media interviews: herrenbrueck@sfu.ca.

CONTACT:

LUCAS HERRENBRUECK, SFU Department of Economics  
herrenbrueck@sfu.ca

BRADEN MCMILLAN, SFU Communications & Marketing 
236.880.3459 | bradenm@sfu.ca