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This paper develops a stochastic endogenous growth model that exhibits “excess volatility” of equity prices because speculative agents overreact to observed technology shocks. When making forecasts about the future, speculative agents behave like rational agents with very low risk aversion....
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Panel discussion for the Federal Reserve Board/Journal of Money, Credit, and Banking (JMCB) conference on "Financial Markets and Monetary Policy", Washington D.C. , June 5, 2009
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