Learning Process and Rational Expectations
Author | : Olivier Basdevant |
Publisher | : |
Total Pages | : 32 |
Release | : 2003 |
Genre | : Economic forecasting |
ISBN | : |
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Author | : Olivier Basdevant |
Publisher | : |
Total Pages | : 32 |
Release | : 2003 |
Genre | : Economic forecasting |
ISBN | : |
Author | : George W. Evans |
Publisher | : Princeton University Press |
Total Pages | : 440 |
Release | : 2012-01-06 |
Genre | : Business & Economics |
ISBN | : 1400824265 |
A crucial challenge for economists is figuring out how people interpret the world and form expectations that will likely influence their economic activity. Inflation, asset prices, exchange rates, investment, and consumption are just some of the economic variables that are largely explained by expectations. Here George Evans and Seppo Honkapohja bring new explanatory power to a variety of expectation formation models by focusing on the learning factor. Whereas the rational expectations paradigm offers the prevailing method to determining expectations, it assumes very theoretical knowledge on the part of economic actors. Evans and Honkapohja contribute to a growing body of research positing that households and firms learn by making forecasts using observed data, updating their forecast rules over time in response to errors. This book is the first systematic development of the new statistical learning approach. Depending on the particular economic structure, the economy may converge to a standard rational-expectations or a "rational bubble" solution, or exhibit persistent learning dynamics. The learning approach also provides tools to assess the importance of new models with expectational indeterminacy, in which expectations are an independent cause of macroeconomic fluctuations. Moreover, learning dynamics provide a theory for the evolution of expectations and selection between alternative equilibria, with implications for business cycles, asset price volatility, and policy. This book provides an authoritative treatment of this emerging field, developing the analytical techniques in detail and using them to synthesize and extend existing research.
Author | : M. Hashem Pesaran |
Publisher | : Wiley-Blackwell |
Total Pages | : 325 |
Release | : 1989 |
Genre | : Business & Economics |
ISBN | : 9780631168850 |
Author | : L. Broze |
Publisher | : Routledge |
Total Pages | : 144 |
Release | : 2013-06-17 |
Genre | : Business & Economics |
ISBN | : 1136457801 |
A comprehensive exposition of rational expectations models is provided here, working up from simple univariate models to more sophisticated multivariate and non-linear models.
Author | : YiLi Chien |
Publisher | : |
Total Pages | : |
Release | : 2020 |
Genre | : |
ISBN | : |
Author | : Richard Thomas Curtin |
Publisher | : Cambridge University Press |
Total Pages | : 365 |
Release | : 2019-02-07 |
Genre | : Business & Economics |
ISBN | : 1107004691 |
Proposes a new comprehensive theory about how expectations are formed and how they shape the macro economy.
Author | : Markus Zenner |
Publisher | : Springer Science & Business Media |
Total Pages | : 209 |
Release | : 2013-11-09 |
Genre | : Business & Economics |
ISBN | : 3642518761 |
1. 1 Rational Expectations and Learning to Become Rational A characteristic feature of dynamic economic models is that, if future states of the economy are uncertain, the expectations of agents mat ter. Producers have to decide today which amount of a good they will produce not knowing what demand will be tomorrow. Consumers have to decide what they spend for consumption today not knowing what prices will prevail tomorrow. Adopting the neo-classical point of view that economic agents are 'rational' in the sense that they behave in their own best interest given their expectations about future states of the ecomomy it is usually assumed that agents are Bayesian deci sion makers. But, as LUCAS points out, there remains an element of indeterminacy: Unfortunately, the general hypothesis that economic agents are Bayesian decision makers has, in many applications, lit tle empirical content: without some way of infering what an agent's subjective view of the future is, this hypothesis is of no help in understanding his behavior. Even psychotic behavior can be (and today, is) understood as "rational", given a sufficiently abnormal view of relevant probabili ties. To practice economics, we need some way (short of psychoanalysis, one hopes) of understanding which decision problem agents are solving. (LucAs (1977, p. 15)) 2 CHAPTER 1. INTRODUCTION 1. 1.
Author | : Roger Guesnerie |
Publisher | : MIT Press |
Total Pages | : 498 |
Release | : 2005-02-18 |
Genre | : Business & Economics |
ISBN | : 9780262262903 |
A theoretical assessment of the Rational Expectations Hypothesis through subjecting a collection of economic models to an "eductive stability" test. The rational expectations hypothesis (REH) dominates economic modeling in areas ranging from monetary theory, macroeconomics, and general equilibrium to finance. In this book, Roger Guesnerie continues the critical analysis of the REH begun in his Assessing Rational Expectations: Sunspot Multiplicity and Economic Fluctuations, which dealt with the questions raised by multiplicity and its implications for a theory of endogenous fluctuations. This second volume emphasizes "eductive" learning: relying on careful reasoning, agents must deduce what other agents guess, a process that differs from the standard evolutionary learning experience in which agents make decisions about the future based on past experiences. A broad "eductive" stability test is proposed that includes common knowledge and results in a unique "rationalizable expectations equilibrium." This test provides the basis for Guesnerie's theoretical assessment of the plausibility of the REH's expectational coordination, emphasizing, for different categories of economic models, conditions for the REH's success or failure. Guesnerie begins by presenting the concepts and methods of the eductive stability analysis in selected partial equilibrium models. He then explores to what extent general equilibrium strategic complementarities interfere with partial equilibrium considerations in the formation of stable expectations. Guesnerie next examines two issues relating to eductive stability in financial market models, speculation and asymmetric price information. The dynamic settings of an infinite horizon model are then taken up, and particular standard and generalized saddle-path solutions are scrutinized. Guesnerie concludes with a review of general questions and some "cautious" remarks on the policy implications of his analysis.
Author | : Bruno S. Frey |
Publisher | : Springer |
Total Pages | : 168 |
Release | : 2017-03-08 |
Genre | : Business & Economics |
ISBN | : 3319474588 |
Reporting on cutting-edge advances in economics, this book presents a selection of commentaries that reveal the weaknesses of several core economics concepts. Economics is a vigorous and progressive science, which does not lose its force when particular parts of its theory are empirically invalidated; instead, they contribute to the accumulation of knowledge. By discussing problematic theoretical assumptions and drawing on the latest empirical research, the authors question specific hypotheses and reject major economic ideas from the “Coase Theorem” to “Say’s Law” and “Bayesianism.” Many of these ideas remain prominent among politicians, economists and the general public. Yet, in the light of the financial crisis, they have lost both their relevance and supporting empirical evidence. This fascinating and thought-provoking collection of 71 short essays written by respected economists and social scientists from all over the world will appeal to anyone interested in scientific progress and the further development of economics.
Author | : Isamu Ginama |
Publisher | : |
Total Pages | : 64 |
Release | : 1991 |
Genre | : Rational expectations (Economic theory). |
ISBN | : |