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We review how realistic frictions in information and/or rationality arrest general equilibrium (GE) feedbacks. In one specification, we maintain rational expectations but remove common knowledge of aggregate shocks. In another, we replace rational expectations with Level-k Thinking or a smooth...
Persistent link: https://www.econbiz.de/10012938745
violation of Ricardian equivalence due to finite lives or liquidity constraints. In such environments, deficits contribute to …
Persistent link: https://www.econbiz.de/10014250202