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Bullard, James; Evans, George W.; Honkapohja, Seppo - 2005

We study how the use of judgement or “add-factors” in macroeconomic forecasting may disturb the set of equilibrium outcomes when agents learn using recursive methods. We isolate conditions under which new phenomena, which we call exuberance equilibria, can exist in standard macroeconomic...

Persistent link: https://www.econbiz.de/10011604601

Liquidity Traps and Expectation Dynamics : Fiscal Stimulus or Fiscal Austerity?

Benhabib, Jess - 2012

We examine global dynamics under infinite-horizon learning in New Keynesian models where the interest-rate rule is subject to the zero lower bound. As in Evans, Guse and Honkapohja (2008), the intended steady state is locally but not globally stable. Unstable deflationary paths emerge after...

Persistent link: https://www.econbiz.de/10013106020

Optimal Provision of Loans and Insurance Against Unemployment from a Lifetime Perspective

Stiglitz, Joseph E. - 2013

In an earlier paper, we showed that integrated individual accounts, allowing individuals to borrow against future pensions when they are unemployed, can be welfare increasing, because it allows increased inter-temporal consumption smoothing without attenuating incentives to search. Here, we...

Persistent link: https://www.econbiz.de/10013081509

Dynamic Optimal Income Taxation with Government Commitment

Brito, Dagobert L. - 2007

income taxation when consumers work for many periods. We also analyze what information, if any, that the government learns … randomization in one-period models. The use of information is limited since only a single lifetime self-selection constraint for … planner can make additional use of the information when individual and social rates of time discounting differ. In this case …

Persistent link: https://www.econbiz.de/10012777113

The Informational Content of Initial Public Offerings

Gale, Ian L. - 2007

The ability of capital markets to distinguish firms of different value by the size of their initial equity offerings is attenuated when insiders can sell equity more than once. A model is developed in which there is price risk from holding equity between periods. When the uncertainty is small....

Persistent link: https://www.econbiz.de/10012777115

Aggregate Land Rents and Aggregate Transport Costs

Arnott, Richard J. - 2001

This paper explores the relationship between aggregate land rents and aggregate transport costs for land markets in which locations differ solely in terms of accessibility. That there exists a relationship between land rents and transport costs has been recognized at least since the time of von...

Persistent link: https://www.econbiz.de/10012787780

A Stochastic Approach to Disequilibrium Macroeconomics

Honkapohja, Seppo - 2010

In this paper, our aim is to develop an alternative approach to analyzing a macroeconomic model where markets do not clear. Earlier approaches have had difficulties in interpreting effective demand, a key concept in disequilibrium macroeconomics. We propose a new definition of effective demand...

Persistent link: https://www.econbiz.de/10012760075

Information and Multi-Period Optimal Income Taxation with Government Commitment

Brito, Dagobert L. - 2010

periods, this paper analyzes what information, if any, that the government learns about abilities in one period can be used in … key use of information is that only a single lifetime self-selection constraint for each type of consumer must be imposed … use of the information when individual and social rates of time discounting differ. In this case, the limiting tax …

Persistent link: https://www.econbiz.de/10012760230

Informational Imperfections in the Capital Market and Macro-Economic Fluctuations

Greenwald, Bruce C. N. - 2010

This paper describes the role that informational imperfections in capital markets are likely to play in business cycles. It then developes a simple illustrative model of the impact of adverse selection in the equity market and the way in which this may lead to large fluctuations in the effective...

Persistent link: https://www.econbiz.de/10012760340

The Pure Theory of Country Risk

Eaton, Jonathan - 2010

information and strategic interaction. Traditional concepts of solvency and liquidity are of little help in understanding problems …

Persistent link: https://www.econbiz.de/10012763435