A model of near-rational exuberance
By: by James B. Bullard, George W. Evans, and Seppo Honkapohja.
Contributors: Evans, George W., 1949-; Honkapohja, Seppo, 1951-; Federal Reserve Bank of St. Louis.
Series: Working paper -- 2007-009A; Working paper (Federal Reserve Bank of St. Louis : Online) -- 2007-009A.
Publisher: Federal Reserve Bank of St. Louis
Published: 2007
Place of publication: [St. Louis, Mo.]
Language: eng
Format: Electronic resource
Description: "We study how the use of judgment or--add-factors--in forecasting may disturb the set of equilibrium outcomes when agents learn using recursive methods.  We isolate conditions under which new phenomena, which we call exuberance equilibria, can exist in a standard self-referential environment.  Local indeterminacy is not a requirement for existence.  We construct a simple asset pricing example and find that exuberance equilibria, when they exist, can be extremely volatile relative to fundamental equilibria"--Federal Reserve Bank of St. Louis web site.
Notes: Title from PDF file as viewed on 4/16/2007.

Includes bibliographical references.

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