Topics
Irrational Exuberance
Irrational exuberance is a term used to describe excessive or unfounded optimism or enthusiasm, especially in the context of financial markets.
The term "irrational exuberance" was coined by former Federal Reserve Chairman Alan Greenspan in a speech he gave on December 5, 1996. In the speech, Greenspan discussed the booming stock market of the time and expressed concerns about whether it was sustainable. He warned of "signs of exuberance in equity prices that are not fully justified by the long-term stream of our earnings and dividends" and suggested that the market was in a state of "irrational exuberance."
Greenspan's speech is often credited with being one of the first public statements by a major policy maker to warn of a potential bubble in the stock market. The phrase "irrational exuberance" has since become a commonly used term to describe market speculation and excessive optimism that can drive asset prices to unsustainable levels.
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2.5.3 Economic Booms (Edexcel A-Level Economics Teaching PowerPoint)
Teaching PowerPoints
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What is Rational Choice Decision Making?
Study Notes
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What is an asset bubble?
Study Notes
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What can cause a house price (property) bubble?
Study Notes
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Rational Decision Making and Consumer Welfare
Topic Videos
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Rational Behaviour (Quizlet Revision Activity)
Quizzes & Activities
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Bounded Rationality (Behavioural Economics)
Topic Videos
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Behavioural and Neo-Classical Economics (Revision Essay Plan)
Practice Exam Questions
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Robert Shiller on Animal Spirits
10th March 2009
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Mini Documentary on Financial Instability
15th April 2012
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Irrational Exuberance and Twitter shares
20th October 2013