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of the BN decomposition when the information set includes other I (1) and/or stationary variables. We show that the … relative importance of the cyclical component depends on the information set, and in particular that multivariate BN … information set includes a variable which Granger-causes output. We illustrate the results for post-war data for the United States. …
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agents' beliefs. We assume that agents choose their information acquisition rate by minimizing a loss function that depends … on expected forecast errors and information costs. Endogenous inattention is a Nash equilibrium in the information …
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The rational expectations hypothesis swept through macroeconomics during the 1970's and permanently altered the landscape. It remains the prevailing paradigm in macroeconomics, and rational expectations is routinely used as the standard solution concept in both theoretical and applied...
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