AS.180.101 Lecture Notes - Lecture 10: Robert J. Shiller, Efficient-Market Hypothesis, Eugene Fama
Document Summary
Market divided into: fed, wall street, then average consumers. Bloomberg screen is the constant re-pricing green screen, gives changing story on market activity. Markets not always efficient, people are not always forward looking, so it is not easy to tell. Fama markets are efficient, most of the time: the centerpiece of freshwater economics positive outlook. Shiller markets can be irrational, over long periods: acceptable commentary at saltwater schools believe more intervention is needed. An efficient financial market is one in which security prices always fully. If irrational, their actions are random and cancel. If irrational in similar ways, rational speculators reverse their effects on asset prices. Varies pretty dramatically currently 2%, which is considered very low. Bond yields: driven by inflation and real growth expectations. The fisher equation: i = r + pi: interest rate = real rate + inflation rate. Companies, governments, central banks and hoseholds provide and digest information. All of this information is raitonaly processed.
