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Shifting Expectations about Technology Growth as a Propagation Mechanism

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  • Masashi Saito

    (Economics Boston University)

Abstract

Growth 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

Suggested Citation

  • Masashi Saito, 2005. "Shifting Expectations about Technology Growth as a Propagation Mechanism," Computing in Economics and Finance 2005 387, Society for Computational Economics.
    • Handle: RePEc:sce:scecf5:387
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    Cited by:

    1. Eric R. Young & Ponpoje Porapakkarm, 2008. "Information Heterogeneity in the Macroeconomy," 2008 Meeting Papers 67, Society for Economic Dynamics.
    2. Luo Yulei & Young Eric R, 2009. "Rational Inattention and Aggregate Fluctuations," The B.E. Journal of Macroeconomics, De Gruyter, vol. 9(1), pages 1-43, April.

    More about this item

    Keywords

    real business cycle model; imperfect information; regime switching;
    All these keywords.

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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