High equity premia and crash fears -- rational foundations (Q2502343): Difference between revisions

This paper deals with Lucas-style economies and gives new contributions to equilibrium recursive rational learning. The key condition for these results to obtain is the presence of sufficient initial pessimism. Some real-world examples are added. Mathematically, to show the existence of equilibria, a global discussion of the modelling functions (having a stochastic behavior as background) is possible.