Expectational business cycles
I introduce Expectational Business Cycles where aggregate activity fluctuates due to learning, heterogeneous updating rules and random changes in the social norm predictor. Agents use one of two updating rules to learn the equilibrium values while heterogeneity is dictated via an evolutionary process. Uncertainty of a new equilibrium, due to a shock to the structure of the economy, results in a sudden decrease in output. As agents learn the equilibrium, output slowly increases to its equilibrium value. These business cycles arrive faster, are longer and more severe as agents possess less rationality.
|Date of creation:||12 Oct 2004|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.suomenpankki.fi/en/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eran Guse, 2004.
"Learning with Heterogeneous Expectations in an Evolutionary World,"
Computing in Economics and Finance 2004
99, Society for Computational Economics.
- Guse, E., 2005. "Learning with Heterogeneous Expectations in an Evolutionary World," Cambridge Working Papers in Economics 0547, Faculty of Economics, University of Cambridge.
- In-Koo Cho & Noah Williams & Thomas J. Sargent, 2002.
"Escaping Nash Inflation,"
Review of Economic Studies,
Oxford University Press, vol. 69(1), pages 1-40.
- Timmermann, Allan, 1996. "Excess Volatility and Predictability of Stock Prices in Autoregressive Dividend Models with Learning," Review of Economic Studies, Wiley Blackwell, vol. 63(4), pages 523-57, October.
- Van Nieuwerburgh, Stijn & Veldkamp, Laura, 2006.
"Learning asymmetries in real business cycles,"
Journal of Monetary Economics,
Elsevier, vol. 53(4), pages 753-772, May.
- GRANDMONT, Jean-Michel, 1997.
"Expectations formation and stability of large socioeconomic systems,"
CORE Discussion Papers
1997088, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Jean-Michel Grandmont, 1998. "Expectations Formation and Stability of Large Socioeconomic Systems," Econometrica, Econometric Society, vol. 66(4), pages 741-782, July.
- Jean-Michel Grandmont, 1997. "Expectations Formation and Stability of Large Socioeconomic Systems," Working Papers 97-27, Centre de Recherche en Economie et Statistique.
- Grandmont, Jean-Michel, 1994. "Expectations formation and stability of large socioeconomic systems," CEPREMAP Working Papers (Couverture Orange) 9424, CEPREMAP.
- Honkapohja, Seppo & Mitra, Kaushik, 2002.
"Learning stability in economics with heterogeneous agents,"
Working Paper Series
0120, European Central Bank.
- Seppo Honkapohja & Kaushik Mitra, 2006. "Learning Stability in Economies with Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(2), pages 284-309, April.
- Kaushik Mitra & Seppo Honkapohja, 2004. "Learning Stability in Economies with Heterogenous Agents," Royal Holloway, University of London: Discussion Papers in Economics 04/17, Department of Economics, Royal Holloway University of London, revised Jul 2004.
- Seppo Honkapohja & Kaushik Mitra, 2002. "Learning Stability in Economies with Heterogenous Agents," CESifo Working Paper Series 772, CESifo Group Munich.
- Moreno Diego & Walker Mark, 1994. "Two Problems in Applying Ljung's Projection Algorithms to the Analysis of Decentralized Learning," Journal of Economic Theory, Elsevier, vol. 62(2), pages 420-427, April.
- George Evans & Seppo Honkapohja & Paul Romer, 1996.
NBER Working Papers
5659, National Bureau of Economic Research, Inc.
- Cogley, Timothy, 2005.
"How fast can the new economy grow? A Bayesian analysis of the evolution of trend growth,"
Journal of Macroeconomics,
Elsevier, vol. 27(2), pages 179-207, June.
- Timothy Cogley, . "How Fast Can the New Economy Grow? A Bayesian Analysis of the Evolution of Trend Growth," Working Papers 2133301, Department of Economics, W. P. Carey School of Business, Arizona State University.
- Thomas Sargent & Noah Williams & Tao Zha, 2006.
"The conquest of South American inflation,"
2006-20, Federal Reserve Bank of Atlanta.
- Taylor, John B, 1977. "Conditions for Unique Solutions in Stochastic Macroeconomic Models with Rational Expectations," Econometrica, Econometric Society, vol. 45(6), pages 1377-85, September.
- Simon M. Potter, 1999. "Fluctuations in confidence and asymmetric business cycles," Staff Reports 66, Federal Reserve Bank of New York.
- Guse, Eran A., 2005. "Stability properties for learning with heterogeneous expectations and multiple equilibria," Journal of Economic Dynamics and Control, Elsevier, vol. 29(10), pages 1623-1642, October.
- Kenneth Kasa, 1995.
"Signal extraction and the propagation of business cycles,"
Working Papers in Applied Economic Theory
95-14, Federal Reserve Bank of San Francisco.
- Kenneth Kasa, 2000. "Forecasting the Forecasts of Others in the Frequency Domain," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(4), pages 726-756, October.
- William Poole, 2002.
49, Federal Reserve Bank of St. Louis.
- Chryssi Giannitsarou, 2003. "Heterogeneous Learning," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(4), pages 885-906, October.
- Hamilton, James D, 1989. "A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle," Econometrica, Econometric Society, vol. 57(2), pages 357-84, March.
- Evans, George W. & Honkapohja, Seppo & Marimon, Ramon, 2001.
"Convergence In Monetary Inflation Models With Heterogeneous Learning Rules,"
Cambridge University Press, vol. 5(01), pages 1-31, February.
- Evans, George W. & Honkapohja, Seppo & Marimon, Ramon, 1996. "Convergence in Monetary Inflation Models with Heterogeneous Learning Rules," CEPR Discussion Papers 1310, C.E.P.R. Discussion Papers.
- Grandmont Jean-michel & Laroque G, 1990. "Economic dynamics with learning : some instability examples," CEPREMAP Working Papers (Couverture Orange) 9007, CEPREMAP.
- Martin Chalkley & In Ho Lee, 1998. "Learning and Asymmetric Business Cycles," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(3), pages 623-645, July.
When requesting a correction, please mention this item's handle: RePEc:hhs:bofrdp:2004_019. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Minna Nyman)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.