We present a simple overlapping generations model of an asset market in which irrational
noise traders with erroneous stochastic beliefs both affect prices and earn higher expected …

Analyses of rational speculation usually presume that it dampens fluctuations caused by “noise”
traders. This is not necessarily the case if noise traders follow positive‐feedback …

Using data from the United Nations Comparison Project and the Penn World Table, we find
that machinery and equipment investment has a strong association with growth: over 1960–…

Economists have always expected the" 4convergence" of national productivity levels. The
theoretical logic behind this belief is powerful. The per capita income edge of the West is …

… We argue that although the conventional wis dom articulated by John Taylor (2000) rejecting
discretionary fiscal policy is appropriate in normal times, such policy has a major role to …

… We show that for many types of misperceptions, as long as such noise … long run wealth and
despite their excessive consumption. We conclude that the theoretical case against the long …

ONE of the oldest themes in economics is the incompatibility of despotism and development.
Economies in which security of property is lacking-because of either the possibility of arrest, …

THE NATURAL RATE HYPOTHESIS, with its corollary that demand manage-ment policies
cannot affect an economy's long-run average level of unemployment or output, has come to …

… Bradford De Long's was supported by the NBER, and by the National Science and Olin
Foundations. This paper is part of NBER's research program in International Studies. Any …

… J. Bradford De Long is an assistant professor of economics at Harvard University and a
faculty research fellow of the National Bureau of Economic Research. The author would like to …