1
$\begingroup$

I've been reading Cochrane's 2006 paper "The Dog that did not bark: A Defense of Return Predictability", but i am still struggling to understand what the dog was, and why it wasn't barking?

If anyone could shed some brief intuition that would be appreciated. Perhaps my knowledge of existing literature, in order to identify the 'dog' is lacking.

$\endgroup$
5
$\begingroup$

I'm not sure how deep of a question you are asking. The dog that did not bark is from a Sherlock Holmes murder mystery. The dog at the house did not bark at the intruder, so Holmes believed the dog knew the intruder. Therefore, the lack of evidence like barking, was itself the evidence. In the Chochrane paper, the introduction mentions that the lack of evidence of returns predictability is itself evidence. In this case, it is evidence of dividend growth being predictable. Clearly the author is just trying to come up with a literary twist to make his paper more interesting so I would not take it very seriously. I can't defend Chochrane's actual use of this evidence because, although I only skimmed it, I did not find the paper very convincing.

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.