Market Fundamentals vs Rational Bubbles in Stock Prices: A Bayesian Perspective Nathan S. Balke Department of Economics Southern Methodist University Dallas, TX 75275 and Research Department Federal Reserve Bank of Dallas Office: 214-768-2693 Fax: 214-768-1821 E-mail: nbalke@mail.smu.edu Mark E. Wohar Department of Economics University of Nebraska at Omaha RH-512K Omaha, NE 68182-0286 Phone: 402-554-3712 Fax: 402-554-2853 E-mail: mwohar@mail.unomaha.edu March 31, 2006 Acknowledgements: We thank seminar participants at Southern Methodist University and University of Kansas, and The 2006 Society of Nonlinear Dynamics and Econometrics Conference for helpful comments. The views expressed in this paper are those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of Dallas or those of the Federal Reserve System.