Rational thinking under costly information—Macroeconomic implications

The notion of optimized rational behavior in the formation of expectations is used in this note to study the dynamics of a simple macroeconomic model. In a setting where departures from stability are not possible under perfect foresight, the selection of an optimal degree of rationality may lead to the generation of long-term endogenous fluctuations.

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Year of publication:	2012
Authors:	Gomes, Orlando
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 115.2012, 3, p. 427-430
Publisher:	Elsevier
Subject:	Expectations \| Information acquisition \| Inflation dynamics \| Rationality \| Endogenous fluctuations \| Stability

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Type of publication:	Article
Classification:	E30 - Prices, Business Fluctuations, and Cycles. General ; D84 - Expectations; Speculations ; C62 - Existence and Stability Conditions of Equilibrium
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011041783