Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/211987 
Authors: 
Year of Publication: 
2004
Series/Report no.: 
Bank of Finland Discussion Papers No. 19/2004
Publisher: 
Bank of Finland, Helsinki
Abstract: 
I introduce Expectational Business Cycles where aggregate activity fluctuates due to learning, heterogeneous updating rules and random changes in the social norm predictor.Agents use one of two updating rules to learn the equilibrium values while heterogeneity is dictated via an evolutionary process.Uncertainty of a new equilibrium, due to a shock to the structure of the economy, results in a sudden decrease in output.As agents learn the equilibrium, output slowly increases to its equilibrium value. These business cycles arrive faster, are longer and more severe as agents possess less rationality.
Subjects: 
adaptive learning
aggregate fluctuations
heterogeneous expectations
multiple equilibria
rational expectations
JEL: 
C62
D84
E37
Persistent Identifier of the first edition: 
ISBN: 
952-462-156-8
Document Type: 
Working Paper

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