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Learning as a Rational Foundation for Macroeconomics and Finance

George W. Evans and Seppo Honkapohja

in Rethinking Expectations: The Way Forward for Macroeconomics

Published in print:
2013
Published Online:
October 2017
ISBN:
9780691155234
eISBN:
9781400846450
Item type:
chapter
Publisher:
Princeton University Press
DOI:
10.23943/princeton/9780691155234.003.0003
Subject:
Economics and Finance, Macro- and Monetary Economics

This chapter examines the central ideas about learning and bounded rationality for macroeconomics and finance. It first introduces the main methodological issues concerning expectation formation and ... More


Which Way Forward for Macroeconomics and Policy Analysis?

Roman Frydman and Edmund S. Phelps

in Rethinking Expectations: The Way Forward for Macroeconomics

Published in print:
2013
Published Online:
October 2017
ISBN:
9780691155234
eISBN:
9781400846450
Item type:
chapter
Publisher:
Princeton University Press
DOI:
10.23943/princeton/9780691155234.003.0001
Subject:
Economics and Finance, Macro- and Monetary Economics

This introductory chapter discusses the papers presented at the Center on Capitalism and Society conference held in the fall of 2010. The conference, which commemorated the fortieth anniversary of ... More


Asset Pricing in Discrete Time: A Complete Markets Approach

Ser-Huang Poon and Richard Stapleton

Published in print:
2005
Published Online:
July 2005
ISBN:
9780199271443
eISBN:
9780191602559
Item type:
book
Publisher:
Oxford University Press
DOI:
10.1093/0199271445.001.0001
Subject:
Economics and Finance, Financial Economics

Relying on the existence, in a complete market, of a pricing kernel, this book covers the pricing of assets, derivatives, and bonds in a discrete time, complete markets framework. It is primarily ... More


Expectational Coordination Failures and Market Volatility

Roger Guesnerie

in Rethinking Expectations: The Way Forward for Macroeconomics

Published in print:
2013
Published Online:
October 2017
ISBN:
9780691155234
eISBN:
9781400846450
Item type:
chapter
Publisher:
Princeton University Press
DOI:
10.23943/princeton/9780691155234.003.0002
Subject:
Economics and Finance, Macro- and Monetary Economics

This chapter examines one line of criticism of the Rational Expectations Hypothesis (REH): expectational coordination failures. It begins by addressing the question of what went wrong with standard ... More


Solving Nonlinear Rational Expectations Models by Eigenvalue–Eigenvector Decompositions

Alfonso Novales, Emilio Domínguez, Javier J. Pérez, and Jesús Ruiz

in Computational Methods for the Study of Dynamic Economies

Published in print:
2001
Published Online:
November 2003
ISBN:
9780199248278
eISBN:
9780191596605
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/0199248273.003.0004
Subject:
Economics and Finance, Macro- and Monetary Economics

Discusses the main issues involved in practical applications of solution methods that have been proposed for rational expectations models, based on eigenvalue–eigenvector decompositions. It starts by ... More


The Imperfect Knowledge Imperative in Modern Macroeconomics and Finance Theory

Roman Frydman and Michael D. Goldberg

in Rethinking Expectations: The Way Forward for Macroeconomics

Published in print:
2013
Published Online:
October 2017
ISBN:
9780691155234
eISBN:
9781400846450
Item type:
chapter
Publisher:
Princeton University Press
DOI:
10.23943/princeton/9780691155234.003.0005
Subject:
Economics and Finance, Macro- and Monetary Economics

This chapter examines the imperfect knowledge imperative in modern macroeconomics and finance theory. It argues that the Rational Expectations Hypothesis (REH) has nothing to do with how even ... More


New Classical Economics

Lutz G. Arnold

in Business Cycle Theory

Published in print:
2002
Published Online:
October 2011
ISBN:
9780199256815
eISBN:
9780191698385
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/acprof:oso/9780199256815.003.0004
Subject:
Economics and Finance, Financial Economics

This chapter begins by examining the Lucas model (1973), the ‘down-to-earth’ (Phelps 1990:42) version of Lucas' (1972) pioneering article on Expectations and the Neutrality of Money. It then ... More


Stopping Moderate Inflations: The Methods of Poincaré and Thatcher

Thomas J. Sargent

in Rational Expectations and Inflation

Published in print:
2013
Published Online:
October 2017
ISBN:
9780691158709
eISBN:
9781400847648
Item type:
chapter
Publisher:
Princeton University Press
DOI:
10.23943/princeton/9780691158709.003.0004
Subject:
Economics and Finance, Economic History

This chapter examines the methods adopted by British Prime Minister Margaret Thatcher and her French counterpart Raymond Poincaré to reduce the rate of inflation. Advocates of the two main groups of ... More


Rational Expectations and Inflation

Thomas J. Sargent

Published in print:
2013
Published Online:
October 2017
ISBN:
9780691158709
eISBN:
9781400847648
Item type:
book
Publisher:
Princeton University Press
DOI:
10.23943/princeton/9780691158709.001.0001
Subject:
Economics and Finance, Economic History

This collection of essays uses the lens of rational expectations theory to examine how governments anticipate and plan for inflation, and provides insight into the pioneering research for which the ... More


Contemporary Macroeconomic Theory

Ernesto Screpanti and Stefano Zamagni

in An Outline of the History of Economic Thought

Published in print:
2005
Published Online:
October 2005
ISBN:
9780199279142
eISBN:
9780191602887
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/0199279144.003.0010
Subject:
Economics and Finance, History of Economic Thought

The first of three chapters dedicated to the post-war period. Compares and contrasts the 'neoclassical synthesis' and the monetarist counter-revolution. Shows the rational expectation revolution as ... More


Rational Expectations and the Reconstruction of Macroeconomics

Thomas J. Sargent

in Rational Expectations and Inflation

Published in print:
2013
Published Online:
October 2017
ISBN:
9780691158709
eISBN:
9781400847648
Item type:
chapter
Publisher:
Princeton University Press
DOI:
10.23943/princeton/9780691158709.003.0001
Subject:
Economics and Finance, Economic History

This chapter discusses the rational expectations reconstruction of macroeconomics. In particular, it examines how the hypothesis of rational expectations has been used to develop econometric models ... More


Interpreting Linear Models

David F. Hendry

in Dynamic Econometrics

Published in print:
1995
Published Online:
November 2003
ISBN:
9780198283164
eISBN:
9780191596384
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/0198283164.003.0006
Subject:
Economics and Finance, Econometrics

Regression, linear least‐squares approximation, contingent plan, and behavioural model are distinguished as four interpretations that ‘look alike’ yet have different properties. Models of ... More


Rethinking Expectations: The Way Forward for Macroeconomics

Roman Frydman and Edmund S. Phelps (eds)

Published in print:
2013
Published Online:
October 2017
ISBN:
9780691155234
eISBN:
9781400846450
Item type:
book
Publisher:
Princeton University Press
DOI:
10.23943/princeton/9780691155234.001.0001
Subject:
Economics and Finance, Macro- and Monetary Economics

This book originated from a 2010 conference marking the fortieth anniversary of the publication of the landmark “Phelps microfoundations volume,” Microeconomic Foundations of Employment and Inflation ... More


The Imbalance of Power Conception

Frank Lovett

in A General Theory of Domination and Justice

Published in print:
2010
Published Online:
September 2010
ISBN:
9780199579419
eISBN:
9780191722837
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/acprof:oso/9780199579419.003.0003
Subject:
Political Science, Political Theory

This chapter examines the connection between social power and domination. It is argued that an imbalance of social power is a necessary, but not sufficient condition of domination. Social power is ... More


New Keynesian Economics

Lutz G. Arnold

in Business Cycle Theory

Published in print:
2002
Published Online:
October 2011
ISBN:
9780199256815
eISBN:
9780191698385
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/acprof:oso/9780199256815.003.0006
Subject:
Economics and Finance, Financial Economics

This chapter presents a real RBC-style model in which the interplay of real rigidities in the markets for credit and labor causes fluctuations. It also examines similar ideas in a monetarist-style ... More


United States Then, Europe Now

Thomas J. Sargent

in Rational Expectations and Inflation

Published in print:
2013
Published Online:
October 2017
ISBN:
9780691158709
eISBN:
9781400847648
Item type:
chapter
Publisher:
Princeton University Press
DOI:
10.23943/princeton/9780691158709.003.0010
Subject:
Economics and Finance, Economic History

This chapter shows that predicaments facing the European Union today are reminiscent of constitutional decisions the United States faced not once, but twice. It begins with a simple expected present ... More


The Parameterized Expectations Approach: Some Practical Issues

Albert Marcet and Guido Lorenzoni

in Computational Methods for the Study of Dynamic Economies

Published in print:
2001
Published Online:
November 2003
ISBN:
9780199248278
eISBN:
9780191596605
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/0199248273.003.0007
Subject:
Economics and Finance, Macro- and Monetary Economics

Some practical issues are discussed that relate to the use of the parameterized expectations approach (PEA) for solving nonlinear stochastic dynamic models with rational expectations. This approach ... More


Information

James Bergin

in Microeconomic Theory: A Concise Course

Published in print:
2005
Published Online:
July 2005
ISBN:
9780199280292
eISBN:
9780191602498
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/0199280290.003.0012
Subject:
Economics and Finance, Microeconomics

Discusses models of information. Blackwells theorem in garbling and the value of information is proved. Monotonicity of decisions in signals is considered and related to supermodularity of the ... More


The Ends of Four Big Inflations

Thomas J. Sargent

in Rational Expectations and Inflation

Published in print:
2013
Published Online:
October 2017
ISBN:
9780691158709
eISBN:
9781400847648
Item type:
chapter
Publisher:
Princeton University Press
DOI:
10.23943/princeton/9780691158709.003.0003
Subject:
Economics and Finance, Economic History

This chapter examines several dramatic historical experiences that are consistent with the “rational expectations” view but that seem difficult to reconcile with the “momentum” model of inflation. ... More


MULTI-PERIOD ASSET PRICING

Ser-Huang Poon and Richard Stapleton

in Asset Pricing in Discrete Time: A Complete Markets Approach

Published in print:
2005
Published Online:
July 2005
ISBN:
9780199271443
eISBN:
9780191602559
Item type:
chapter
Publisher:
Oxford University Press
DOI:
10.1093/0199271445.003.0005
Subject:
Economics and Finance, Financial Economics

‘Multi-period Asset Pricing’ expands the analysis of asset prices to a multi-period economy, where an investor has to make consumption decisions in each period which may lead to consumption and ... More


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