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This paper presents simple models with competitive markets, fully flexible prices and fully observable macro-economic variables. Agents hold heterogeneous beliefs because the exogenous shocks are stable but non-stationary and the true law of motion is unknown to agents. We show that the...
Persistent link: https://www.econbiz.de/10010786947
The Rational Beliefs Theory is founded on the observation that in most situations the same data may be rationally explained (in terms of a statistical model) in many different ways. This is obvious in a world where there is a limited number of observations. The novel idea of the Rational Beliefs...
Persistent link: https://www.econbiz.de/10010786840
The Rational Beliefs Theory is founded on the observation that in most situations the same data may be rationally explained (in terms of a statistical model) in many different ways. This is obvious in a world where there is a limited number of observations. The novel idea of the Rational Beliefs...
Persistent link: https://www.econbiz.de/10010786963
Today’s demand for social insurance is supported by economic reasoning showing that private insurance markets do not provide efficient coverage for medical insurance, for inter-generational risk sharing and for income instability. It is unfashionable to say but government intervention in these...
Persistent link: https://www.econbiz.de/10010786827
Persistent link: https://www.econbiz.de/10010786915
Persistent link: https://www.econbiz.de/10010571184