 |
| What happened to the world economy? (Photo credit: diwong) |
It’s always been a puzzle to me why stocks prices can continue to surge as the economic statistics get worse; a depression in Spain with 25% unemployment, housing prices dropping for the 6th straight month, GDP down to 2.2%, stores closing all over New York .
Perhaps a paper given at the Federal Reserve Bank of Boston on April 22 by two Harvard economists, and one from the New York Fed– “Investment Dynamics With Natural Expectations” gives a partial explanation.
” We study an economy in which agents have the wrong beliefs about the dynamic properties of fundamentals,” write Harvard’s Benjamin Herbert and David Laibson( who will b e on my panel at my 55th Harvard reunion on May 22) and Andreas... Continue to read.
No comments:
Post a Comment