Economics, Econometrics and Finance
8 years ago

Confidence levels linked to economic crashes and market volatility, study finds.

The Economic Journal
Confidence, Crashes and Animal Spirits
Roger E. A. Farmer

Paper Summary

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The article "Confidence, Crashes and Animal Spirits" explores how people's confidence affects economic crashes. The researchers found that when people are optimistic, the economy tends to do well, but when confidence drops, crashes can happen. They suggest that policymakers should focus on boosting confidence to prevent economic downturns.