2. In a rigorous analysis of Dutch financial records, Koudijs and Voth conclude that the only real difference between the pessimists and the optimists was whether they had gone through a harrowing personal experience. Koudijs compares it to the behavior of people who lived through the Great Depression, and who avoided financial risk for decades after trauma had passed.
6. What dangers does the Fed present to EMs today? One of the biggest risks, says Mr Koepke, is that it might “get behind the curve” and delay raising rates for too long. This would result not only in a surprisingly big hike when it came, but also a higher terminal interest rate than would otherwise be the case.