Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

I would say a couple of things. One, you can think of the cost of raising capital through equity as having some small influence on business investment. That is pretty small. The big effect would be primarily on consumption, as you mentioned. Wealth effects to a smaller extent would affect housing as well. But I think of that as a wealth channel. But there is a bit of a cost-of-capital effect through raising funds through equity that you might think of as well. Another thing I would say is that the difficulty here is distinguishing the equity premium from general risk concerns, risk premiums in general, or increased compensation for higher risk or default risk in a number of these credit spreads we are talking about; those are sort of related. It is hard to keep these things separate in any kind of an accounting. Also, these things tend to be correlated with consumer and business sentiment. Again, that is another thing that is hard to keep separate.

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