Please use this identifier to cite or link to this item: https://hdl.handle.net/2440/41238
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Type: Journal article
Title: Near-rational expectations in animal spirits models of aggregate fluctuations
Author: Weder, M.
Citation: Economic Modelling, 2004; 21(2):249-265
Publisher: Elsevier Science BV
Issue Date: 2004
ISSN: 0264-9993
Abstract: A growing number of studies has raised concerns about the empirical and theoretical content of rational expectations. This paper evaluates the role of near-rationality in dynamic general equilibrium with indeterminacy. We show that sunspot equilibria are quite robust to perturbations of the forecasting mechanism: the particular form of near-rationality considered exerts little effects on the region of indeterminacy. This upshot casts doubt upon the standpoint that bounded rationality effectively reduces the likelihood of sunspot equilibria. The prime impact of bounded behavior appears to be on volatility and persistence.
Keywords: Indeterminacy
Rational expectations
Bounded rationality
Business cycles
Description: Elsevier
DOI: 10.1016/S0264-9993(03)00005-1
Published version: http://dx.doi.org/10.1016/s0264-9993(03)00005-1
Appears in Collections:Aurora harvest 6
Economics publications

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