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A Continuity Refinement For Rational Expectations Solutions
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Book Synopsis A Continuity Refinement for Rational Expectations Solutions by : Bennett T. MacCallum
Download or read book A Continuity Refinement for Rational Expectations Solutions written by Bennett T. MacCallum and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Linear RE models typically possess a multiplicity of solutions. Consider, however, the requirement that the solution coefficients must not be infinitely discontinuous in the model's structural parameters. In particular, we require that the solutions should be continuous in the limit as those parameters, which express quantitatively the extent to which expectations affect endogenous variables, go to zero. The paper shows that under this condition there is, for a very broad class of linear RE models, only a single solution.
Book Synopsis The Forward Method as a Solution Refinement in Rational Expectations Models by : Seonghoon Cho
Download or read book The Forward Method as a Solution Refinement in Rational Expectations Models written by Seonghoon Cho and published by . This book was released on 2008 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper generalizes the standard forward method of recursive substitution to a general class of linear Rational Expectations models with potentially multiple fundamental solutions. We propose a key property embedded in the forward solution -- the no-bubble condition -- as an economically sensible solution refinement in the class of fundamental solutions. In the literature, the no-bubble condition has been assumed to rule out non-fundamental bubble solutions. However, since the condition involves expectations of the future endogenous variables, it must be verified for every Rational Expectations equilibrium. We show that the forward solution is the only fundamental solution satisfying the no-bubble condition and that it is hard to justify economically fundamental solutions violating this condition. We provide several economic examples where the fundamental solutions obtained by other solution methods and refined by other solution selection criteria violate the no-bubble condition.
Book Synopsis Refining Linear Rational Expectations Models and Equilibria by : Seonghoon Cho
Download or read book Refining Linear Rational Expectations Models and Equilibria written by Seonghoon Cho and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper proposes forward convergence as a model refinement scheme for linear rational expectations (LRE) models and an associated no-bubble condition as a solution selection criterion. We relate these two concepts to determinacy and characterize the complete set of economically relevant rational expectations solutions to the LRE models under determinacy and indeterminacy. Our results show (1) why a determinate solution is economically meaningful in most, but not all, cases, and (2) that those models that are not forward-convergent have no economically relevant solutions.
Book Synopsis Linear Rational Expectations Models by : Charles H. Whiteman
Download or read book Linear Rational Expectations Models written by Charles H. Whiteman and published by U of Minnesota Press. This book was released on 1984 with total page 151 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Assessing Rational Expectations 2 by : Roger Guesnerie
Download or read book Assessing Rational Expectations 2 written by Roger Guesnerie and published by MIT Press. This book was released on 2005-02-18 with total page 498 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Solving Nonlinear Rational Expectations Models by Parameterized Expectations by : Albert Marcet
Download or read book Solving Nonlinear Rational Expectations Models by Parameterized Expectations written by Albert Marcet and published by . This book was released on 1994 with total page 118 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Methods of Solution and Simulation for Dynamic Rational Expectations Models by : Olivier J. Blanchard
Download or read book Methods of Solution and Simulation for Dynamic Rational Expectations Models written by Olivier J. Blanchard and published by . This book was released on 1983 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many methods have been proposed for the solution and simulation of medium or large size models under the assumption of rational expectations. The purpose of this paper is to present these methods, and to show how and where each can be applied. The methods fall into two groups. Methods in the first can be used to solve for perfect foresight paths in non-linear models. Methods in the second can be used in linear models, to solve either for paths or processes followed by endogenous variables. All the methods described here have been used in empirical applications and computer algorithms are available for most.
Book Synopsis Solution Techniques for Rational Expectations Models by : Charles H. Whiteman
Download or read book Solution Techniques for Rational Expectations Models written by Charles H. Whiteman and published by . This book was released on 1982 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Rational Expectations by : Graham Keith Shaw
Download or read book Rational Expectations written by Graham Keith Shaw and published by . This book was released on 1984 with total page 150 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Characterisations of Rational Expectations Solutions to Present Value Models with Feedback by : A. Timmermann
Download or read book Characterisations of Rational Expectations Solutions to Present Value Models with Feedback written by A. Timmermann and published by . This book was released on 1992 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis A Reader's Guide to Rational Expectations by : Deborah A. Redman
Download or read book A Reader's Guide to Rational Expectations written by Deborah A. Redman and published by Edward Elgar Publishing. This book was released on 1992 with total page 216 pages. Available in PDF, EPUB and Kindle. Book excerpt: The major purpose of this work is to make staying up to date with rational expectations (RE) easier for economists in government, academia and industry, as well as for students.
Book Synopsis Solutions of Dynamic Linear Rational Expectations Models by : L. Broze
Download or read book Solutions of Dynamic Linear Rational Expectations Models written by L. Broze and published by . This book was released on 1984 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis A Comparison of Alternative Solution Methods for the Linear Rational Expectations Model by : Wanpyo Son
Download or read book A Comparison of Alternative Solution Methods for the Linear Rational Expectations Model written by Wanpyo Son and published by . This book was released on 1986 with total page 268 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Solutions to Linear Rational Expectations Models by : Bennett T. McCallum
Download or read book Solutions to Linear Rational Expectations Models written by Bennett T. McCallum and published by . This book was released on 1998 with total page 8 pages. Available in PDF, EPUB and Kindle. Book excerpt: An elementary exposition is presented of a convenient and practical solution procedure for a broad class of linear rational expectations models. The undetermined-coefficient approach utilized keeps the mathematics very simple and permits consideration of alternative solution criteria
Book Synopsis Rational Expectations Models with a Continuum of Convergent Solutions by : Michael L. Mussa
Download or read book Rational Expectations Models with a Continuum of Convergent Solutions written by Michael L. Mussa and published by . This book was released on 2010 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines five examples of rational expectations models with a continuum of convergent solutions and demonstrates serious difficulties in the economic interpretation of these solutions. The five examples are (1) a model of optimal capital accumulation with a negative rate of time preference, (2) Taylor's (1977) linear rational expectations model of macroeconomic equilibrium; (3) Calvo's (1984) model of contract setting and price dynamics; (4) Obstfeld's (1984) equilibrium model of monetary dynamics with individual optimizing agents; and (5) Calvo's (1978) life-cycle model of savings and asset valuation. In every case, when these models yield a continuum of convergent infinite horizon solutions, these solutions fail to exhibit economically appropriate, forward looking dependence of the endogenous variables on the paths of the exogenous forcing variab1es--a difficulty that does not arise under the circumstances where these models yield unique convergent infinite horizon solutions. Further, the three models that have natural finite horizon versions, either lack finite horizon solutions or have solutions that do not converge to any of the infinite horizon solutions. Again, this difficulty arises only under the circumstances where these models have a continuum of infinite horizon solutions.
Book Synopsis The Solution of Nonlinear Forward Looking Rational Expectations Models by : Peter Jurriëns
Download or read book The Solution of Nonlinear Forward Looking Rational Expectations Models written by Peter Jurriëns and published by . This book was released on 1986 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Characterisations of Rational Expectations Solutions to Present Value Models with Feedback by : Allan G. Timmermann
Download or read book Characterisations of Rational Expectations Solutions to Present Value Models with Feedback written by Allan G. Timmermann and published by . This book was released on 1992 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt:
