Narrative Economics Shiller, Robert J.
The American economic review,
04/2017, Letnik:
107, Številka:
4
Journal Article
Recenzirano
This address considers the epidemiology of narratives relevant to economic fluctuations. The human brain has always been highly tuned toward narratives, whether factual or not, to justify ongoing ...actions, even such basic actions as spending and investing. Stories motivate and connect activities to deeply felt values and needs. Narratives "go viral" and spread far, even worldwide, with economic impact. The 1920-1921 Depression, the Great Depression of the 1930s, the so-called Great Recession of 2007-2009, and the contentious political-economic situation of today are considered as the results of the popular narratives of their respective times. Though these narratives are deeply human phenomena that are difficult to study in a scientific manner, quantitative analysis may help us gain a better understanding of these epidemics in the future.
The efficient markets theory reached the height of its dominance in academic circles around the 1970s. Faith in this theory was eroded by a succession of discoveries of anomalies, many in the 1980s, ...and of evidence of excess volatility of returns. Finance literature in this decade and after suggests a more nuanced view of the value of the efficient markets theory, and, starting in the 1990s, a blossoming of research on behavioral finance. Some important developments since 1990 include feedback theories, models of the interaction of smart money with ordinary investors, and evidence on obstacles to smart money.
The U.S. economic expansion since 2009 is the longest on record since 1854, according to the National Bureau of Economic Research Business Cycle Dating Committee. This paper seeks to understand this ...phenomenon better by looking at the time paths of popular narratives over this interval, of stories that people have been telling that offer clues into their economic behavior. Six constellations of narratives are studied, identified by keywords “Great Depression,” “secular stagnation,” “sustainability,” “housing bubble,” “strong economy,” and “save more.”
Risk management institutions can be reinvented in the 21st century in response to the changing nature of economic uncertainties and changing information technology. The COVID-19 pandemic and its ...effects on the economy provide an example of new kinds of uncertainties to be managed. National and international contracts should manage risks to claims on better-defined economic aggregates and prices of factors of human capital to make for better economic measurements and better risk management opportunities. The failures of international management of the COVID-19 pandemic, including failure to control the spread of misinformation, provide lessons for such new financial arrangements
At the 2012 CFA Institute Financial Analysts Seminar, held 23–27 July in Chicago, Robert J. Shiller discussed his view that capitalism must be constantly updated through innovation in order to be ...successful in its purpose of achieving society's goals. Three recent innovations—the benefit corporation, crowd funding, and the social impact bond—are good examples of how finance and financiers can contribute to attaining these goals.
The institutions for financing owner-occupied housing have not progressed as they should, and the financial innovation that has followed the financial crisis of 2007-2009 has not been focused on ...improving the risk management of individual homeowners. This paper lists a number of barriers to housing finance innovation, and in light of these barriers, the problems of some major innovations of the past and future: self-amortizing mortgages, price-level adjusted mortgages (PLAMs), shared appreciation mortgages (SAMs), housing partnerships, and continuous workout mortgages (CWMs).
El concepto de John Maynard Keynes (1936) de “espíritus animales” o de “optimismo espontáneo” como una de las principales fuerzas que impulsan las fluctuaciones económicas se inspiró en parte por sus ...reflexiones y las de sus contemporáneos sobre las reacciones humanas ante situaciones ambiguas donde las probabilidades no podían cuantificarse. Existe evidencia de que, en situaciones tan inciertas, las personas permiten que narrativas populares contagiosas y las emociones provocadas por éstas influyan en sus decisiones económicas. Dichas narrativas no suelen basarse en hechos, pero son contagiosas. Los modelos macroeconómicos dinámicos necesitan una teoría que guarde relación con los modelos epidemiológicos de transmisión de enfermedades. Debemos tratar con seriedad el contagio de narrativas en los modelos económicos si queremos mejorar nuestra comprensión de los espíritus animales y su impacto en la economía.
A 30-Year Perspective on Property Derivatives Fabozzi, Frank J.; Shiller, Robert J.; Tunaru, Radu S.
The Journal of economic perspectives,
10/2020, Letnik:
34, Številka:
4
Journal Article
Recenzirano
Odprti dostop
The housing sector is the largest spot market in the world without a developed derivative contract to serve the risk management needs of market participants. This paper describes the evolution within ...a wider economic context of property derivatives in the United States and worldwide. We review various economic arguments presented in the literature to highlight the advantages of these financial instruments to society. The paper also provides a critical perspective on the principal obstacles hindering the development of property derivatives based on real estate prices—especially housing prices—and what can be done to overcome these difficulties. The issues discussed can serve as a guide for designing property derivatives capable of hedging real estate risk that has resurfaced time and time again in financial crises.
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