eBook

Learning and Expectations in Macroeconomics

Honkapohja, Seppo, Evans, George W

2001

Overview

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.

• Publisher: Princeton University Press
• Subject: Adaptive Erwartungen / Adaptive expectations / Adaptive learning / Algorithm / Begrenzte Rationalität / Behavioral economics / BUSINESS & ECONOMICS / BUSINESS & ECONOMICS / Economic History / Calculation / Cobweb model / Computational economics / Coordination failure (economics) / Cost curve / Demand curve / Differential equation / Econometric model / Economic bubble / Economic Conditions / Economic equilibrium / Economic History / Economic policy / Economics / Economics -- Methodology / Economics -- Statistical methods / Economist / Eigenvalues and eigenvectors / Endogenous growth theory / Equation / Equilibrium point / Erwartung / Estimation / Estimation theory / Estimator / Exchange rate / Financial economics / Fiscal policy / Forecast error / Forecasting / General equilibrium theory / Inflation / Inflation targeting / Initial value problem / Interest rate / Large-scale macroeconometric model / Learning effect (economics) / Learning rule / Least squares / Lernen / Linear model / Local convergence / Macroeconomic model / Macroeconomics / Makroökonomie / Makroökonomik / Marginal product / Market economy / Market price / Markov chain / Markov process / Mathematical optimization / Methodologie / Methodology / Monetary policy / Nichtlineare Regression / Nominal interest rate / Parameter / Preference (economics) / Price level / Probability / Production function / Rational expectations / Rational expectations (Economic theory) / Rationalität / Real business-cycle theory / Recursion (computer science) / Regression / Special case / Stability theory / State variable / Statistical methods / Stochastic approximation / Stochastic calculus / Stochastic differential equation / Stochastic process / Stochastic simulation / Stochastischer Prozess / Supply (economics) / Supply and demand / Technical progress (economics) / Theorie / Variable (mathematics) / Volkswirtschaftslehre
• ISBN: 9780691049212, 9781400824267, 0691049211, 1400824265