The dispute about the import of changes in the stock market revolves
around their causal role in economic fluctuation: Are they a source of
variation in aggregate demand? Does the causation run solely in the opposite
direction?O r do the levels of economica ctivitya nd of stock prices
simplyr esponds imilarlyt o other,m oreb asic,e conomicf orces,w ithn o direct
causal link betweent he two? This third interpretationis consistent
with a view that the stock market reflects investors' attempts to forecast
economic trend