Shifting Expectations about Technology Growth as a Propagation Mechanism
AbstractGrowth rates of macro aggregates are more persistent than technology growth in data. We develop a theory that accounts for this observation. In the model there are two types of shocks affecting the growth rate of technology, one transitory and another persistent, but agents do not observe them separately and form a belief about their relative contribution. The process of belief updating serves as a propagation mechanism enabling the model to generate movements in macro growth rates more persistent than that of the driving force
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Bibliographic InfoPaper provided by Society for Computational Economics in its series Computing in Economics and Finance 2005 with number 387.
Date of creation: 11 Nov 2005
Date of revision:
real business cycle model; imperfect information; regime switching;
Find related papers by JEL classification:
- E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
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