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The Rise of the Machines: Automation, Horizontal Innovation and Income Inequality

Hemous, David; Olsen, Morten - C.E.P.R. Discussion Papers - 2014

We construct an endogenous growth model of directed technical change with automation (the introduction of machines … are low, which induces little automation, such that income inequality and labor's share of GDP are constant. Second, as … low-skill wages increase, investment in automation is stimulated, which depresses the future growth rate of low …

Persistent link: https://www.econbiz.de/10011084688

Should One Rely on Professional Exchange Rate Forecasts? An Empirical Analysis of Professional Forecasts for the €/US$ Rate

Bofinger, Peter; Schmidt, Robert - C.E.P.R. Discussion Papers - 2004

The study analyses the characteristics of professional exchange rate forecasts for the €/US$ rate. The results indicate that the quality of forecasts produced by professional economists is rather poor and incompatible with the rational expectations hypothesis. This dismal result is according...

Persistent link: https://www.econbiz.de/10005666725

Entry Mistakes, Entrepreneurial Boldness and Optimism

Brocas, Isabelle; Carrillo, Juan D - C.E.P.R. Discussion Papers - 1999

We analyze the investment decision of a population of time inconsistent entrepreneurs who overweight current payoffs relative to future returns. We show that, in order to avoid inefficient procrastination, agents may find it optimal to keep optimistic priors about their chances of success and...

Persistent link: https://www.econbiz.de/10005791696

Earnings Management to Exceed Thresholds

Degeorge, François; Patel, U; Zeckhauser, Richard - C.E.P.R. Discussion Papers - 1998

Investors are keenly interested in financial reports of earnings because earnings provide important information for investment decisions. Thus, executives who are monitored by investors and directors face strong incentives to manage earnings. We introduce consideration of...

Persistent link: https://www.econbiz.de/10005792487

Information Acquisition and Portfolio Performance

Guiso, Luigi; Jappelli, Tullio - C.E.P.R. Discussion Papers - 2006

Rational investors perceive correctly the value of financial information. Investment in information is therefore rewarded with a higher Sharpe ratio. Overconfident investors overstate the quality of their own information, and thus attain a lower Sharpe ratio. We contrast the implications of the...

Persistent link: https://www.econbiz.de/10005123525

Money Illusion and Housing Frenzies

Brunnermeier, Markus K; Julliard, Christian - C.E.P.R. Discussion Papers - 2007

A reduction in inflation can fuel run-ups in housing prices if people suffer from money illusion. For example, investors who decide whether to rent or buy a house by simply comparing monthly rent and mortgage payments do not take into account that inflation lowers future real mortgage costs. We...

Persistent link: https://www.econbiz.de/10005067397

The Real Effects of Investor Sentiment

Polk, Christopher; Sapienza, Paola - C.E.P.R. Discussion Papers - 2003

Does inefficiency of financial markets have real consequences? Or does it only result in transfers of wealth from noise traders to arbitrageurs? We study firm business investment to address this question. In our model, benevolent managers of overvalued companies invest in projects with negative...

Persistent link: https://www.econbiz.de/10005067581

Do Individual Investors Have Asymmetric Information Based On Work Experience?

Døskeland, Trond; Hvide, Hans K - C.E.P.R. Discussion Papers - 2009

Using a novel and unique dataset from Norway, we analyze whether professional proximity is associated with asymmetric information and abnormal returns. We find that individuals hold an excess weight in stocks that are professionally close. For example, after excluding holdings of own-company and...

Persistent link: https://www.econbiz.de/10005068286

Hot Markets, Investor Sentiment and IPO Pricing

Ljungqvist, Alexander P.; Nanda, Vikram; Singh, Rajdeep - C.E.P.R. Discussion Papers - 2001

Our model of the initial public offering process links the three main empirical IPO ‘anomalies’ – underpricing, hot issue markets, and long-run underperformance – and traces them to a common source of inefficiency. We relate hot IPO markets (such as the 1999/2000 market for Internet...

Persistent link: https://www.econbiz.de/10005498165

The Gambler's and Hot-Hand Fallacies: Theory and Applications

Rabin, Matthew; Vayanos, Dimitri - C.E.P.R. Discussion Papers - 2007

We develop a model of the gambler's fallacy -- the mistaken belief that random sequences should exhibit systematic reversals. We show that an individual who holds this belief and observes a sequence of signals can exaggerate the magnitude of changes in an underlying state but underestimate their...

Persistent link: https://www.econbiz.de/10005504387

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