
School Seminar series | Asset Pricing with Non-rational Expectations by Bruce Preston
Invites you to a
School seminar presented by
(University of Melbourne)
Asset Pricing with Non-rational Expectations
Thursday 24 November
11.00am – 12.30pm
Via Zoom: Meeting Link
Abstract: Economic models used for policy analysis can neither account for observed large swings in asset prices given fundamentals nor explain the impact of asset price changes on the real economy. This paper derives a generalized no-arbitrage condition that prices assets under a general class of non-rational, “distorted” beliefs. This condition predicts equilibrium asset prices persistently deviate from the “fundamentals” rational expectations price. Income effects from distorted beliefs modify the dynamic effects of economic disturbances and engender spill-over effects across asset, product and input markets. We show these effects matter for monetary policy.
For further information contact: School seminar series coordinators Dr Ye Lu (ye.lu1@sydney.edu.au) & Dr Alastair Fraser (alastair.fraser@sydney.edu.au)
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