TY  - BOOK
AU  - Bordalo,Pedro
AU  - Gennaioli,Nicola
AU  - La Porta,Rafael
AU  - O'Brien,Matthew
AU  - Shleifer,Andrei
ED  - National Bureau of Economic Research.
TI  - Long Term Expectations and Aggregate Fluctuations
T2  - NBER working paper series
PY  - 2023///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
KW  - General
KW  - jelc
KW  - Business Fluctuations • Cycles
KW  - Financial Markets and the Macroeconomy
KW  - Macro-Based Behavioral Economics
KW  - Financial Crises
N1  - August 2023; Hardcopy version available to institutional subscribers
N2  - In line with Keynes' intuition, volatility in the stock market and in real economic activity are linked by expectations of long term profits. We show that analysts' optimism about the long term earnings growth of S&P 500 firms is associated with a near term boom in major US financial markets, real investment, and other business cycle indicators. The same optimism however predicts disappointing earnings growth and a contraction in financial markets and real activity one to two years later. Overreaction of measured long term profit expectations emerges as a promising mechanism for reconciling Shiller's excess volatility puzzle with the business cycle
UR  - https://www.nber.org/papers/w31578
UR  - http://dx.doi.org/10.3386/w31578
ER  -