Stock Market Fluctuations

In Search of the Origins of Financial Fluctuations: The Inelastic Markets Hypothesis ArXiv ID: ssrn-3686935 “View on arXiv” Authors: Unknown Abstract We develop a framework for analyzing stock market fluctuations, both theoretically and empirically. Households allocate capital to institutions with limited fle Keywords: Stock Market Fluctuations, Household Portfolio Allocation, Capital Flows, Institutional Investors, Market Dynamics, Equity Complexity vs Empirical Score Math Complexity: 8.5/10 Empirical Rigor: 7.0/10 Quadrant: Holy Grail Why: The paper employs advanced theoretical modeling and econometrics (GIV) to derive and estimate market elasticity, demonstrating high mathematical sophistication. Empirical analysis uses granular instrumental variables and macro data to quantify a key parameter ($5 impact per $1 invested), making it data-heavy and implementation-ready. flowchart TD A["Research Goal: Investigate origins of stock market fluctuations"] --> B["Key Methodology: Inelastic Markets Hypothesis (IMH) Framework"] B --> C["Data/Inputs: Household capital allocation to institutions, institutional equity holdings"] C --> D["Computational Process: Theoretical modeling & empirical analysis of capital flows"] D --> E["Key Outcomes: Capital flows drive price fluctuations, explains market inelasticity"]

In Search of the Origins of Financial Fluctuations: The Inelastic Markets Hypothesis ArXiv ID: ssrn-3875134 “View on arXiv” Authors: Unknown Abstract We develop a framework to theoretically and empirically analyze the fluctuations of the aggregate stock market. Households allocate capital to institutions, whi Keywords: Stock Market Fluctuations, Household Capital Allocation, Institutional Holdings, Financial Markets, Portfolio Choice, Equity Complexity vs Empirical Score Math Complexity: 8.0/10 Empirical Rigor: 7.0/10 Quadrant: Holy Grail Why: The paper introduces a novel theoretical framework with dynamic general equilibrium models and pricing kernels (high math complexity), while rigorously testing its core hypothesis using granular instrumental variables (GIV) on real financial data to estimate a precise price impact multiplier of ~5, including robustness checks (high empirical rigor). flowchart TD A["Research Goal Understand aggregate stock market fluctuations"] --> B["Methodology Develop theoretical & empirical framework"] B --> C["Input Data Household & institutional capital allocation data"] C --> D["Computational Process Estimate supply & demand elasticities"] D --> E["Key Finding Markets are inelastic due to limited arbitrage"] E --> F["Outcome Explains volatility puzzles & asset pricing"]