A predictive multi-agent approach to model systems with linear rational expectations
Expectation formation plays a principal role in economic systems. We examine and revise the standard rational expectations (RE) model, generally taken as the best paradigm for expectations modelling, and suggest a new method to model rational expectations. Conventional conditions that assert the stability and uniqueness of popular solution methods are shown to be insufficient. The agent-based new modelling approach suggested in this paper will be shown to lead to uniquely stable solutions.
|Date of creation:||08 Jan 2011|
|Date of revision:||11 Dec 2011|
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