Shiller wins economics Nobel for 'bubble' warnings
Robert Shiller, who became famous for calling the housing and
internet stock bubbles, was one of three Americans to win the Nobel in
economics.
Shiller is a professor at Yale University. He is joined by Eugene
Fama and Lars Peter Hansen, who teach at the University of Chicago.
The award was for their work on the pricing of financial assets.
Together they concluded that predicting the price of stocks and bonds in
the short term is virtually impossible. But they showed it is possible
to forecast the broad course of prices over longer periods, such as
three to five years.
Shiller was among those who warned in the 1990s that the run-up in
stock prices as part of the internet stock bubble was the result of
"irrational exuberance."
Last decade, Shiller made similar warnings about the run-up in US
home prices. That proved to be correct when the housing bubble burst and
plunged the nation into the worst economic downturn since the Great
Depression.
He helped to develop the S and P - Case-Shiller home price index,
which is one of the most closely watched measures of home values.
Shiller said economists are still drawing lessons from the bursting of
the housing bubble.
"I think there's much more to be done. I think it will take decades,"
Shiller said. "But we've been through financial crises many times in our
history and we've generally learned from them."
Fama and Hansen are not as well known as Shiller outside the field of
economics. Hansen developed a statistical method that was well suited to
testing theories of asset pricing, the committee said.
CNN
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