Bask, Mikael; Madeira, João - Nationalekonomiska Institutionen, Uppsala Universitet - 2011
We outline a dynamic stochastic general equilibrium (DSGE) model with trend extrapolation in asset pricing that we fit … Smets and Wouters (2007) by incorporating asset traders who use a mix of fundamental analysis and trend extrapolation in … asset pricing. We conclude that trend extrapolation in asset pricing is quantitatively relevant, statistically significant …