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We model a simple communication network model for the evolution of heterogeneous beliefs in an overlapping generation economy. Each agent gathers information from his contacts and forms an inflation forecast based on this information, using the belief generating procedures. When the actual...
Persistent link: https://www.econbiz.de/10005345265
This paper analyses the dynamic investment and growth prospects of a financially constrained firm. Three types of financing constraints are examined: internal finance, debt ceiling and exponential interest costs. To study the growth dynamics of firms subject to the above constraints, numerical...
Persistent link: https://www.econbiz.de/10005345288
In the late 1960s and into the 1970s, the United States experienced a burst of inflation the origins of which seemed hard to uncover. This paper advances the idea that the Fed simply got the model wrong. We assume that the true model of the economy is a variant of the standard New Keynesian...
Persistent link: https://www.econbiz.de/10005345293
The Schelling Model of Spatial Segregation is a fundamental consumer choice model in the fields of computational and urban economics. In our paper, we unite the research from these two fields to examine if the housing preferences of a heterogeneous population of homeowners lead to Schelling's...
Persistent link: https://www.econbiz.de/10005345298
This paper is of interest for two reasons. First, it provides a simple algorithm for solving an optimal control problem in which the law of motion of the economy is a Markov regime-switching vector autoregression. Second, it applies this algorithm to study optimal monetary policy in a stylised...
Persistent link: https://www.econbiz.de/10005706520