Heuristic Expectation Formation And Business Cycles: A Simple Linear Model
AbstractWe develop a Keynesian business cycle model to study how extrapolative and regressive expectation formation rules may affect fluctuations in economic activity. We find that simple expectation formation rules may have an impact on the level and the stability of the equilibrium income, the size of the multiplier and the resulting adjustment process after an exogenous shocks. Our model also reveals that national income may be influenced by how agents perceive their long-run average income. Copyright � 2007 The Author; Journal compilation � 2007 Blackwell Publishing Ltd.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Metroeconomica.
Volume (Year): 59 (2008)
Issue (Month): 1 (02)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0026-1386
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- Sordi, Serena & Vercelli, Alessandro, 2012.
"Heterogeneous expectations and strong uncertainty in a Minskyian model of financial fluctuations,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 83(3), pages 544-557.
- Serena Sordi & Alessandro Vercelli, 2010. "Heterogeneous expectations and strong uncertainty in a Minskyian model of financial fluctuations," Department of Economic Policy, Finance and Development (DEPFID) University of Siena 1010, Department of Economic Policy, Finance and Development (DEPFID), University of Siena.
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