Monday, 14 October 2013

Bursting Eugene Fama's Bubble

By Robert P. Murphy (February 2010)

In a recent interview in the New Yorker, Eugene Fama, Chicago School economist and father of the efficient-markets hypothesis (EMH), defended his theory in light of the housing boom and crash. Fama's views on asset bubbles and business cycles stand in sharp contrast to the standard Austrian position. Although Chicago and Austrian economists are on the same side on many policy questions — particularly in their opposition to Keynesian solutions — Fama's interview reveals the large differences in their theoretical toolboxes.

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