James Tobin's old idea's still being used, now to predict disaster.
Addition: Ask Pete what he said he'd do if he met Tobin, and then ask Pete what he actually did the day later when he ran into him.
2nd Addition: Tobin had at least one thing right:
Transactions-- if not in toothpaste, then surely in financial instruments -- occur in large part because of disagreements. It follows that the expectations of the marginal buyers or sellers are of those that matter in the determination of prices in spot and futures markets.... But the marginal transactors are not the same from day to day or year to year, and they do not necessarily represent the average opinion of market participants and non-participants. A disquieting feature of aggregate models which assume uniform expectations is that they do not explain why there are any transactions at all in existing assets.
pg. 27 of his Asset Accumulation and Economic Activity (1980).
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