As the NFL season is in full swing, I’ve neglected posts about some other things. Here’s an interesting read from Robert Shiller, a Yale economics professor, in the NY Times about the psychology behind economic cycles. Interesting stuff.
Beyond fiscal stimulus and government bailouts, the economic recovery that appears under way may be based on little more than self-fulfilling prophecy.
Consider this possibility: after all these months, people start to think it’s time for the recession to end. The very thought begins to renew confidence, and some people start spending again — in turn, generating visible signs of recovery. This may seem absurd, and is rarely mentioned as an explanation for mass behavior late in a recession, but economic theorists have long been fascinated by such a possibility.
You can read the rest here: What if a Recovery Is All in Your Head?
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