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| Author | : John W. Galbraith |
| Publisher | : |
| Total Pages | : 224 |
| Release | : 1985 |
| Genre | : Economic forecasting |
| ISBN | : |
| Author | : Andreas Fuster |
| Publisher | : |
| Total Pages | : 45 |
| Release | : 2018 |
| Genre | : |
| ISBN | : |
Information frictions play an important role in many theories of expectation formation and macroeconomic fluctuations. We use a survey experiment to generate direct evidence on how people acquire and process information, in the context of national home price expectations. We let consumers buy different pieces of information that could be relevant for the formation of their expectations about the future median national home price. We use an incentive-compatible mechanism to elicit their maximum willingness to pay. We also introduce exogenous variation in the value of information by randomly assigning individuals to rewards for the ex-post accuracy of their expectations. Consistent with rational inattention, individuals are willing to pay more for information when they stand to gain more from it. However, underscoring the importance of limits on information processing capacity, individuals disagree on which signal they prefer to buy. Individuals with lower education and financial numeracy are less likely to demand information that has ex-ante higher predictive power, independently of stakes. As a result, lowering the information acquisition cost does not decrease the cross-sectional dispersion of expectations. Our findings have implications for models of expectation formation and for the design of information interventions.
| Author | : Andreas Fuster |
| Publisher | : |
| Total Pages | : 45 |
| Release | : 2018 |
| Genre | : Consumer behavior |
| ISBN | : |
Information frictions play an important role in many theories of expectation formation and macroeconomic fluctuations. We use a survey experiment to generate direct evidence on how people acquire and process information, in the context of national home price expectations. We let consumers buy different pieces of information that could be relevant for the formation of their expectations about the future median national home price. We use an incentive-compatible mechanism to elicit their maximum willingness to pay. We also introduce exogenous variation in the value of information by randomly assigning individuals to rewards for the ex-post accuracy of their expectations. Consistent with rational inattention, individuals are willing to pay more for information when they stand to gain more from it. However, underscoring the importance of limits on information processing capacity, individuals disagree on which signal they prefer to buy. Individuals with lower education and financial numeracy are less likely to demand information that has ex-ante higher predictive power, independently of stakes. As a result, lowering the information acquisition cost does not decrease the cross-sectional dispersion of expectations. Our findings have implications for models of expectation formation and for the design of information interventions.
| Author | : Maciej Konrad Dudek |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2004 |
| Genre | : |
| ISBN | : |
The paper recognizes that expectations and the process of their formation are subject to standard decision making and are determined as a part of equilibrium. Accordingly, the paper presents a basic framework in which the form of expectation formation is a choice variable. At any point in time rational economic agents decide on the basis of the level of utility what expectation formation technology to use and as a consequence what expectations to hold. As economic decisions are conditioned on expectations holding proper or rational expectations eliminates the possibility of ex ante inefficiencies. The choice of expectation formation technology is not trivial as the paper assumes that information gathering and processing are costly. Consequently, economic agents must make informed decisions with the regard to the quality of expectation formation technologies they wish to use. The paper shows that agents' optimization over expectations not only adds on to realism, but also can carry non trivial implications for the behavior of macroeconomic variables. Specifically, the paper illustrates that endogenous expectation revisions can be a source of permanent oscillations in aggregate demand and can prevent an economy from settling into a steady state. In addition, the paper quantifies intangible notions such as overheating, overborrowing, and output gap. Finally, the paper shows that active policy measures can limit inefficiencies resulting from output fluctuations.
| Author | : Peter J. N. Sinclair |
| Publisher | : Routledge |
| Total Pages | : 402 |
| Release | : 2009-12-16 |
| Genre | : Business & Economics |
| ISBN | : 1135179778 |
Inflation is regarded by the many as a menace that damages business and can only make life worse for households. Keeping it low depends critically on ensuring that firms and workers expect it to be low. So expectations of inflation are a key influence on national economic welfare. This collection pulls together a galaxy of world experts (including Roy Batchelor, Richard Curtin and Staffan Linden) on inflation expectations to debate different aspects of the issues involved. The main focus of the volume is on likely inflation developments. A number of factors have led practitioners and academic observers of monetary policy to place increasing emphasis recently on inflation expectations. One is the spread of inflation targeting, invented in New Zealand over 15 years ago, but now encompassing many important economies including Brazil, Canada, Israel and Great Britain. Even more significantly, the European Central Bank, the Bank of Japan and the United States Federal Bank are the leading members of another group of monetary institutions all considering or implementing moves in the same direction. A second is the large reduction in actual inflation that has been observed in most countries over the past decade or so. These considerations underscore the critical – and largely underrecognized - importance of inflation expectations. They emphasize the importance of the issues, and the great need for a volume that offers a clear, systematic treatment of them. This book, under the steely editorship of Peter Sinclair, should prove very important for policy makers and monetary economists alike.
| Author | : Marc Ivaldi |
| Publisher | : Springer Science & Business Media |
| Total Pages | : 245 |
| Release | : 2012-12-06 |
| Genre | : Business & Economics |
| ISBN | : 3642467350 |
Using panel data of individual firms drawn from French surveys, a structural analysis is developed to study the formation of production plans and the rationality of expectations. The production decision of a firm is defined as the optimal solution of a dynamic stochastic optimization problem. The empirical work amounts to recovering the structural parameters characterizing the model of the firm from estimates of the derived decision rule. The preceding analysis of production plans is based on the assumption that firms are rational. To justify this assumption, direct tests offer evidence that the Rational Expectations Hypothesis may not be rejected for quantity variables.
| Author | : George W. Evans |
| Publisher | : Princeton University Press |
| Total Pages | : 439 |
| Release | : 2001-01-28 |
| Genre | : Business & Economics |
| ISBN | : 0691049211 |
A crucial challenge for economists is to figure out how people interpret the world and form expectations that are likely to influence their economic activity. This work examines a variety of expectation formation models by focusing on the learning factor.
| Author | : Arie Arnon |
| Publisher | : Springer Nature |
| Total Pages | : 244 |
| Release | : 2020-03-20 |
| Genre | : Business & Economics |
| ISBN | : 3030413578 |
This book provides a unique historical perspective on expectations in economic theory, and applications of expectations models in economic history. Based on papers presented at the 2017 Thomas Guggenheim Conference, it brings together the work of economists, historians of economics, and economic historians on issues and events concerning expectations in economics and economic history. The contributions address: (i) the history of expectations models; (ii) growth, expectations and political economy; (iii) controversies regarding expectations methods and models; (iv) expectations in theory and reality; and (v) expectations in economic history. The book opens with a lecture by Thomas Guggenheim Prize winner Duncan Foley on the evolution of expectations in modern economic thought. The remaining content is divided into two parts, the first of which focuses on the utilization of expectations in the “ancient” and “meso” periods of high theory, i.e., from Smithian to Keynesian approaches. The papers cover topics such as “modern” applications of expectations in both “Tobinesque-Phillips” and “Harrodian-Solowian” contexts, and the debate between Friedmanite and Keynesian approaches to expectation formation. In turn, the last part presents essays on the role of economic expectations in connection with historical events and contexts, ranging from the early 20th century to World War II, and on the application of expectations theory to hyperinflation and stabilization, taking Israel as a case study.
| Author | : Isamu Ginama |
| Publisher | : |
| Total Pages | : 64 |
| Release | : 1991 |
| Genre | : Rational expectations (Economic theory). |
| ISBN | : |
| Author | : Mauro Gallegati |
| Publisher | : Academic Press |
| Total Pages | : 276 |
| Release | : 2017-08-03 |
| Genre | : Business & Economics |
| ISBN | : 0128039035 |
Introduction to Agent-Based Economics describes the principal elements of agent-based computational economics (ACE). It illustrates ACE’s theoretical foundations, which are rooted in the application of the concept of complexity to the social sciences, and it depicts its growth and development from a non-linear out-of-equilibrium approach to a state-of-the-art agent-based macroeconomics. The book helps readers gain a better understanding of the limits and perspectives of the ACE models and their capacity to reproduce economic phenomena and empirical patterns. Reviews the literature of agent-based computational economics Analyzes approaches to agents’ expectations Covers one of the few large macroeconomic agent-based models, the Modellaccio Illustrates both analytical and computational methodologies for producing tractable solutions of macro ACE models Describes diffusion and amplification mechanisms Depicts macroeconomic experiments related to ACE implementations
