EC223 Study Guide - Final Guide: Adverse Selection, Canadian Imperial Bank Of Commerce, Econometrics
Document Summary
Washington the economist robert j. shiller in 2005 described the rapid rise of housing prices as a bubble and warned that prices could fall by 40 percent. Five years later, with home prices well on the way to fulfilling mr. shiller"s prediction, the economist eugene f. fama said he still did not believe there had been a bubble. I don"t even know what a bubble means, said mr. fama, the author of the theory that asset prices perfectly reflect all available information. The two men, leading proponents of opposing views about the rationality of financial markets a dispute with important implications for investment strategy, financial regulation and economic policy were joined in unlikely union monday as winners ofthe. Mr. fama"s seminal theory of rational, efficient markets inspired the rise of index funds and contributed to the decline of financial regulation.
