Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105957
Authors: 
Charpe, Matthieu
Flaschel, Peter
Hartmann, Florian
Veneziani, Roberto
Year of Publication: 
2012
Series/Report no.: 
IMK Working Paper 93
Abstract: 
We consider an alternative modelling approach to the mainstream DSGE paradigm, namely basically a Dynamic Stochastic General Disequilibrium model of continuous adjustment processes on interacting real and financial markets. We introduce heterogeneous capital gain expectations (chartists and fundamentalists) and show that the first type of agents tends to destabilise he economy. Global stability can be ensured if opinions favour fundamentalist behaviour far off the steady state. This interaction of expectations and population dynamics is bounding the real-financial market interactions, but allows for irregular behaviour within these bounds. Stability can be further improved by adding suitable policy measures.
Subjects: 
Output dynamics
Portfolio Adjustments
Opinion Dynamics
Viability
Policy Measures
JEL: 
E12
E24
E31
E52
Document Type: 
Working Paper

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