Comment on Assenza and Berardi "Learning in a Credit Economy" (2009, JEDC)
This comment shows that the "optimality" conditions in Assenza and Berardi (2009, JEDC) "Learning in a Credit Economy" imply that agents' "optimal" choices are either suboptimal or infeasible. It presents the correct optimality conditions and discusses the effect on the E-stability condition of the REE. In addition, the different dynamics under the two sets of conditions is illustrated by considering an unexpected productivity impulse. Finally, under heterogeneous learning rules, numerical simulations illustrate that bankruptcy on the part of the borrowers arises sooner as they track the economy faster.
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- Kiyotaki, Nobuhiro & Moore, John, 1997.
Journal of Political Economy,
University of Chicago Press, vol. 105(2), pages 211-48, April.
- John Moore & Nobuhiro Kiyotaki, . "Credit Cycles," Discussion Papers 1995-5, Edinburgh School of Economics, University of Edinburgh.
- Ryo Kato, 2003. "Matlab code for Kiyotaki-Moore credit cycles," QM&RBC Codes 113, Quantitative Macroeconomics & Real Business Cycles.
- Nobuhiro Kiyotaki & John Moore, 1995. "Credit Cycles," NBER Working Papers 5083, National Bureau of Economic Research, Inc.
- Tiziana Assenzay & Michele Berardi, 2008.
"Learning in a Credit Economy,"
Centre for Growth and Business Cycle Research Discussion Paper Series
100, Economics, The Univeristy of Manchester.
- Pei Kuang, 2013.
"Imperfect Knowledge about Asset Prices and Credit Cycles,"
13-02, Department of Economics, University of Birmingham.
- Pei Kuang, 2013. "Imperfect Knowledge about Asset Prices and Credit Cycles," CDMA Working Paper Series 201303, Centre for Dynamic Macroeconomic Analysis.
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