Expectations, learning, and business cycle fluctuations

This paper develops a theory of expectations-driven business cycles based on learning. Agents have incomplete knowledge about how market prices are determined and shifts in expectations of future prices affect dynamics. Learning breaks the tight link between fundamentals and equilibrium prices, indu...

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Bibliographic Details
Published in:	The American economic review 2011-10, Vol.101 (6), p.2844-2872
Main Authors:	Eusepi, Stefano, Preston, Bruce
Format:	Article
Language:	English
Subjects:	1948-2007 Bruttoinlandsprodukt Business cycles Central banks Consumption Economic expectations Economic fluctuations Economic forecasting models Economic growth models Economic models Economic theory Equilibrium Error Errors Erwartung Erwartungsbildung Expectations Forecasting models Forecasts Growth models Households Inflation Information Interest rates Konjunktur Learning Lernen Macroeconomics Modeling Optimism Pessimism Price expectations Prices Produktion Propagation Property Shorter Papers Standard deviation Statistical forecasts Studies Technology Theorie Time series forecasting Unvollkommene Information USA Volatilität Wirtschaft
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