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claim that several features should be considered by an evolutionary approach to political processes: bounded rationality and …
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This paper presents a simple repeated-game model of interaction between the government and the private sector where, at each repetition, the government first makes a non-binding announcement about its future actions. The private sector, unsure whether or not this announcement will be respected,...
Persistent link: https://www.econbiz.de/10005706739
We consider a continuous-time version of Ireland's Neo-Keynesian reinterpretation of the seminal Kydland-Prescott model, assuming now an heterogenous private sector. In each period, a fraction of the private agents naively believes the policy announcements made by the government. The other...
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the role of expectations and inventories in the business cycle. Prices are fixed at the beginning of each period but … depends on their price expectations: only if they expect the price to rise will they desire to buy the planned consumption for … both periods in the first period. Therefore price expectations are decisive for the type of dynamics that comes forth. In …
Persistent link: https://www.econbiz.de/10005706178