This paper provides evidence that learning about demand is an important driver of firms' dynamics. We present a simple … model with Bayesian learning in which firms are uncertain about their idiosyncratic demand parameter in each of the markets … their beliefs following a new demand shock, the younger they are. To test this learning mechanism, we make use of a specific …

time. In addition to the typical structural demand, supply, and policy disturbances, the model incorporates expectation … shocks, which affect the formation of expectations by the private sector. Both the best-fitting learning process and the … their learning model and by the state of the economy. The empirical results uncover a crucial role for these novel …

-shock specification, we identify, using sign restrictions, two non-policy shocks, demand and supply, and two policy shocks, monetary and … fiscal. We obtain the following results. (ii) Both supply and demand shocks are important sources of fluctuations; supply … prevails for GDP, while demand prevails for employment and inflation. (ii) Policy matters: Both monetary and fiscal policy …

to the speculative demand for oil as well as shocks to the flow demand and flow supply. The forward-looking element of … find that this surge was caused by fluctuations in the flow demand for oil driven by the global business cycle. There is … evidence, however, that speculative demand shifts played an important role during earlier oil price shock episodes including …

We model the demand-pressure effect on prices when options cannot be perfectly hedged. The model shows that demand … option. Similarly, the demand pressure increases the price of any other option by an amount proportional to the covariance of … show that demand-pressure effects contribute to well-known option-pricing puzzles. Indeed, time-series tests show that …

When a supply and demand model is recursive, with errors uncorrelated across the two equations, ordinary least squares …

In this paper I develop the Discrete Choice Analytically Flexible (DCAF) model of demand for differentiated products …. DCAF relaxes the constraints imposed on the matrix of own- and cross-price elasticities of demand by popular analytic …-price elasticities of demand. Under well defined constraints on the parameters, which may or may not be imposed in estimation, DCAF is …