办事指南

Why economic theory is out of whack

点击量:   时间:2019-03-14 05:14:01

By Mark Buchanan See also: Editorial: Economic theory just isn’t up to scratch How can we stop the financial markets creating so much misery? Forget textbook economics, the answer lies elsewhere WHEN you next sit down to watch the TV news, listen out for a telling phrase. At some point the newscaster will say something like: “The financial markets reacted to the report with a sharp fall…” Don’t believe a word of it. The markets rarely react to news in this way. Earlier this year, physicist Jean-Philippe Bouchaud and colleagues at Capital Fund Management in Paris studied the news feeds produced by Dow Jones and Reuters that provide real-time reports of items of potential interest to investors. Looking at more than 90,000 news items relevant to hundreds of stocks over a two-year period, they studied how “jumps” in stock prices – sudden, large movements – were linked to news items. They weren’t. Most such jumps weren’t directly associated with any news at all, and most news items didn’t cause any jumps. “Jumps seem to occur for no identifiable reason,” Bouchaud says (www.arxiv.org/abs/0803.1769). This finding flies in the face of traditional economic theory, which insists that markets are mostly in equilibrium, reflecting an overall balance of economic forces. Markets change, the theory says, when those forces change: for example, when good news about a company increases demand for its stock, making its price go up. In this view, dramatic changes can only follow from correspondingly dramatic causes. Bouchard’s evidence says that, in fact, markets have unruly internal dynamics all their own,