Breaking down the divergence between US and euro-zone share prices

Since 2010 and even more so since 2016, equity market indices have risen much faster in the United States than in the euro zone. We break down this divergence between equity market indices, so as to try to interpret it, between: Changes in earnings per share; The effect of share buybacks ( both the effect on the number of shares and the flow effect); The growth-interest rate differential; The equity risk premium and its possible determinants (the objective level of equity risk, equity buying flows). We find that the main causes of the recent divergence between equity market indices in the United States and the euro zone are: S hare buybacks in the United States; The fall in the equity premium in the United States caused by the buybacks and non-resident buying flows. The other possible factors (earnings, growth-interest rate differential, risk level) are not pertinent.