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Stock Market News and Output Growth

Stig V. Møller & Richard Priestley

Journal of Money, Credit and Banking2026https://doi.org/10.1111/jmcb.70044article
AJG 4ABDC A*
Weight
0.50

Abstract

We decompose stock market returns into cash flow news and discount rate news and show that an increase in discount rate news, which reflects an increase in the quantity of risk or level of risk aversion in the economy, predicts a decrease in future aggregate output. Discount rate news, in the form of news about the risk premium, dominates interest rate news and cash flow news and holds incremental predictive power relative to well‐established predictors of output. The predictive power is especially strong in the lower tail of output fluctuations. International evidence confirms U.S. results and also shows that global risk premium news predicts cross‐country output stronger than country‐specific risk premium news.

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https://doi.org/https://doi.org/10.1111/jmcb.70044

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@article{stig2026,
  title        = {{Stock Market News and Output Growth}},
  author       = {Stig V. Møller & Richard Priestley},
  journal      = {Journal of Money, Credit and Banking},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1111/jmcb.70044},
}

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.