From the Investors Chronicle:

Ever since Maynard Keynes coined the phrase in the 1930s, economists have suspected that "animal spirits" - waves of irrational pessimism or optimism - could be a cause of recessions and booms, as George Akerlof and Robert Shiller argued in a recent book. For years, though, it's been difficult to test this theory because it's been hard to distinguish between rational and irrational pessimism. However, a recent paper by Fabio Milani of the University of California at Irvine has tried to solve this problem - and he's found that animal spirits do indeed matter.

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