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Expectations in a dynamic Keynesian model

By M. Schoenhofer and Bielefeld Univ. (Germany). Fakultaet fuer Wirtschaftswissenschaften

Abstract

This paper examines the adaptive forecasting behaviour in an OLG-model with fiat money and temporary disequilibrium situations. Agents are endowed with an expectation function where the forecast for next periods price is updated every period according to a certain rule. In every period the consumption and saving decisions of agents depend on their forecast for next periods price. But agents influence through their decisions the time series they use to update their forecast. This so-called forecast-feedback is very important for the structural form of the dynamical system. If no forecasting-feedback exists, a steady state can only undergo a period-doubling bifurcation [Kaas 1995]. If we take into account the forecasting-feedback, the existence of other bifurcation phenomena is prooved. Thus expectations matter and possibly imply a completely different dynamic behaviour. (orig.)Available from TIB Hannover: RN 9560(305) / FIZ - Fachinformationszzentrum Karlsruhe / TIB - Technische InformationsbibliothekSIGLEDEGerman

Topics: 05D - Economics, economic theory, DYNAMIC MACROECONOMIC MODEL: M, EQUILIBRIUM SETUP, FORECASTING BEHAVIOUR, FORECAST FEEDBACK, DYNAMIC SYSTEM, OLG-MODEL, DYNAMICS ANALYSIS, SHORT-RUN ANALYSIS
Year: 1995
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Provided by: OpenGrey Repository
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