Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/72015
Authors: 
Carroll, Christopher D.
Year of Publication: 
2001
Series/Report no.: 
Working Papers, The Johns Hopkins University, Department of Economics 462
Abstract: 
Since the foundational work of Keynes (1936) macroeconomists have emphasized the importance of agents' expectations in determining macroeconomic outcomes Yet in recent decades macroeconomists have devoted almost no effort to modeling actual empirical expectations data instead assuming all agents' expectations are rational This paper takes up the challenge of modeling empirical household expectations data and shows that a simple standard model from epidemiology does a remarkably good job of explaining the deviations of household inflation and unemployment expectations from the rational expectations benchmark Furthermore a microfoundations or agent-based version of the model may be able to explain in a way that still permits aggregation stark rejections of the pure rational expectations framework like Souleles's (2002) finding that members of different demographic groups have sharply different predictions for macroeconomic aggregates like the inflation rate
Subjects: 
flation
expectations
unemployment
monetary policy
agent-based modeling
JEL: 
E0
E3
Document Type: 
Working Paper

Files in This Item:
File
Size
746.52 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.