Testimony, Campbell and Shiller predicted that between 1997 and 2006,the stock market would lose about 40 percent of its real value
Shiller’s 1981 work generated considerable controversy and has been the subject of many debates The central asks: Do stock prices only change in response to fundamentals? Most of the debate has focused on technical details, which Robert Merton described in his survey of market efficiency
Merton wrote his survey in 1986 and published it in 1987 Of course,1987 was a propitious year for debating questions about stock prices and fundamentals, given that the stock market crashed in October. Immediately thereafter, Shiller conducted a major investor survey to identify the information that led stock prices to lose 25 percent of their value in the course of a single day. Shiller (1990) documents that the market crash of 1987 occurred in the absence of any major news about changing fundamentals.