Plausibly Exogenous [1797] - Inelastic Markets (01/03/2024)

LHS Variable
Demand for stocks

RHS Variable
Price of stocks

Source of Exogenous Variation
The introduction of the prudent investor rule, which systematically alters the relative attractiveness of stocks within the cross-section of U.S. equities for trusts

- Cassella, Rizzo, Spalt, and Zimmerer (2024), “Inelastic U.S. Equity Markets: New Evidence: From A Reform of Fiduciary Duties”