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Heterogeneous Expectations, Indeterminacy, and Postwar US Business Cycles

Ilabaca, Francisco - 2020

This paper estimates a New Keynesian model extended to include heterogeneous expectations, to revisit the evidence that postwar US macroeconomic data can be explained as the outcome of passive monetary policy, indeterminacy, and sunspot-driven fluctuations in the pre-1979 sample, with a switch...

Persistent link: https://www.econbiz.de/10012836715

Approximate Expected Utility Rationalization

Echenique, Federico - 2019

We propose a new measure of deviations from expected utility, given data on economic choices under risk and uncertainty. In a revealed preference setup, and given a positive number e, we provide a characterization of the datasets whose deviation (in beliefs, utility, or perceived prices) is...

Persistent link: https://www.econbiz.de/10012892237

Do Survey Expectations of Stock Returns Reflect Risk-Adjustments?

Adam, Klaus - 2019

Motivated by the observation that survey expectations of stock returns are inconsistent with rational return expectations under real-world probabilities, we investigate whether alternative expectations hypotheses entertained in the asset pricing literature are consistent with the survey...

Persistent link: https://www.econbiz.de/10012892287

Adaptive Agents May Be Smarter than You Think : Unbiasedness in Adaptive Expectations

Palestrini, Antonio; Gallegati, Mauro; Delli Gatti, Domenico - 2021

Agents forming adaptive expectations generally make systematic mistakes. This characterization has fostered the rejection of adaptive expectations in macroeconomics. Experimental evidence, however, shows that in complex environments human subjects frequently rely on adaptive heuristics –...

Persistent link: https://www.econbiz.de/10013217385

Dynamic Rational Inattention and the Phillips Curve

Afrouzi, Hassan; Yang, Choongryul - 2021

We develop a fast, tractable, and robust method for solving the transition path of dynamic rational inattention problems in linear-quadratic-Gaussian settings. As an application of our general framework, we develop an attention-driven theory of dynamic pricing in which the Phillips curve slope...

Persistent link: https://www.econbiz.de/10013250042

Examining Income Expectations in the College and Early Post-College Periods : New Distributional Tests of Rational Expectations

Crossley, Thomas F.; Gong, Yifan; Stinebrickner, Todd R.; … - 2021

Unique longitudinal probabilistic expectations data from the Berea Panel Study, which cover both college and early post-college periods, are used to examine young adults’ beliefs about their future incomes. We introduce a new measure of the ex post accuracy of beliefs, and two new approaches...

Persistent link: https://www.econbiz.de/10013250048

Heterogeneity in Individual Expectations, Sentiment, and Constant-Gain Learning

Cole, Stephen J. - 2020

The adaptive learning approach has been fruitfully employed to model the formation of aggregate expectations at the macroeconomic level, as an alternative to rational expectations. This paper uses adaptive learning to understand, instead, the formation of expectations at the micro-level, by...

Persistent link: https://www.econbiz.de/10012831652

Expecting Brexit

Dhingra, Swati; Sampson, Thomas - 2022

The Brexit vote precipitated the unravelling of the UK’s membership of the world’s deepest economic integration agreement. This paper reviews evidence on the realized economic effects of Brexit. The 2016 Brexit referendum changed expectations about future UK-EU relations. Studying its...

Persistent link: https://www.econbiz.de/10013306955

Uncertainty and Hyperinflation: European Inflation Dynamics after World War I

Lopez, Jose A.; Mitchener, Kris James - 2018

Fiscal deficits, elevated debt-to-GDP ratios, and high inflation rates suggest hyperinflation could have potentially … pushing a subset of European countries into hyperinflation shortly after the end of the war. Germany, Austria, Poland, and … elevated economic uncertainty directly affected inflation dynamics and the incidence of hyperinflation during the interwar …

Persistent link: https://www.econbiz.de/10011872123

How to Escape from the Debt Trap: Lessons from the Past

Mayer, Thomas; Schnabl, Gunther - 2021

, hyperinflation in Germany after World War I, inflation in Argentina since the 1980s, currency reform in Germany after WW II, and …

Persistent link: https://www.econbiz.de/10012582141