Alp Simsek on a Risk-Centric View of Demand, Recession, and Speculation
Macro Musings with David Beckworth
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The Importance of Beliefs and Heterogeneity in Financial Markets
In the housing boom bus cycle there was certainly a general optimism in the boom phase that shared by a lot of the investors but on top of that there was heterogeneity. So once you bring thisogeneity what that does is it sort of amplifies the animal spirits because now optimists Exert a much bigger inflow so essentially make the boom even bigger than it would be otherwise. But when the bus comes now the pessimists become dominant and they make the bus also bigger than what would what would we otherwise? Yeah, this is great because this also seems very consistent with what Roger farmer has done in his work He's talked about having a belief function And I know we'll talk about your policy implications
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