Laibson, David; Fuster, Andreas; Hebert, Benjamin - National Bureau of Economic Research (NBER) - 2011
How does an economy behave if (1) fundamentals are truly hump-shaped, exhibiting momentum in the short run and partial mean reversion in the long run, and (2) agents do not know that fundamentals are hump-shaped and base their beliefs on parsimonious models that they fit to the available data? A...