TY  - JOUR
AU  - Shiller,Robert J.
TI  - Low Interest Rates and High Asset Prices: An Interpretation in Terms of Changing Popular Economic Models
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13558
PY  - 2007
Y2  - October 2007
UR  - http://www.nber.org/papers/w13558
L1  - http://www.nber.org/papers/w13558.pdf
N1  - Author contact info:
Robert J. Shiller
Yale University, Cowles Foundation
Box 208281
30 Hillhouse Avenue
New Haven, CT  06520-8281
Tel: 203/432-3708
Fax: 203/432-6167
E-Mail: robert.shiller@yale.edu
AB  - There has been a widespread perception in the past few years that long-term asset prices are generally high because monetary authorities have effectively kept long-term interest rates, which the market uses to discount cash flows, low. This perception is not accurate. Long-term interest rates have not been especially low. What has changed to produce high asset prices appears instead to be changes in popular economic models that people actually rely on when valuing assets. The public has mostly forgotten the concept of "real interest rate." Money illusion appears to be an important factor to consider.
ER  -