Beauty Contests and Irrational Exuberance: A Neoclassical Approach
NBER Working Paper No. 15883
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This paper subsumes and extends an earlier paper that circulated as a 2007 NBER working paper under the title “Wall Street and Silicon Valley: a Delicate Interaction." We thank Olivier Blanchard, Stephen Morris, Hyun Song Shin, Rob Townsend, Jaume Ventura, Iván Werning, and seminar participants at MIT, the Federal Reserve Board, the Federal Reserve Bank of Boston, the 2007 IESE Conference on Complementarities and Information (Barcelona), the 2007 Minnesota Workshop in Macroeconomic Theory, and the 2007 NBER Summer Institute for useful comments. Angeletos and Pavan thank the NSF for financial support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.