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Exuberance and social contagion

Author

Listed:
  • Orlando Gomes

    (Lisbon Accounting and Business School (ISCAL/IPL) & Business Research Unit (UNIDE/ISCTE-IUL))

Abstract

Episodes of collective exuberance that recurrently hit the economy are, in this note, associated with sentiment propagation in a network of social relations. The pivotal role played by exuberant individuals will give place to a dynamic setting where limit cycles constitute the most plausible long-term outcome. Endogenous sentiment waves, with peaks and troughs of exuberance, are in this way identified in the context of a straightforward interaction scenario.

Suggested Citation

  • Orlando Gomes, 2016. "Exuberance and social contagion," Economics Bulletin, AccessEcon, vol. 36(3), pages 1705-1714.
    • Handle: RePEc:ebl:ecbull:eb-16-00354
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2016/Volume36/EB-16-V36-I3-P166.pdf
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    References listed on IDEAS

    as
    1. Portier, Franck & Beaudry, Paul & Galizia, Dana, 2015. "Reviving the Limit Cycle View of Macroeconomic Fluctuations," CEPR Discussion Papers 10645, C.E.P.R. Discussion Papers.
    2. Peter C. B. Phillips & Yangru Wu & Jun Yu, 2011. "EXPLOSIVE BEHAVIOR IN THE 1990s NASDAQ: WHEN DID EXUBERANCE ESCALATE ASSET VALUES?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(1), pages 201-226, February.
    3. Kivedal, Bjørnar Karlsen, 2013. "Testing for rational bubbles in the US housing market," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 369-381.
    4. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
    5. MeiChi Huang, 2013. "The Role of People’s Expectation in the Recent US Housing Boom and Bust," The Journal of Real Estate Finance and Economics, Springer, vol. 46(3), pages 452-479, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Exuberance; Social interaction; Sentiment waves; Limit cycles; Neimark-Sacker bifurcation.;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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