Emerging Trends: Asset Pricing
Title
Emerging Trends: Asset Pricing
Author
Campbell, John Y.
Research Area
Social Institutions
Topic
Work and the Economy
Abstract
The modern field of asset pricing is organized around the concept of the stochastic discount factor. This essay uses this framework to discuss the literature on predictability of asset returns in the short and long run, the influence of irrational investor expectations on asset prices, and the cross‐section of stock returns. Future progress will require microeconomic data on investor actions and ideally survey evidence on their risk preferences and beliefs.