quantitative model of sovereign debt and default. Overreaction is formalized in terms of diagnostic expectations that excessively …. Counterfactual experiments indicate that diagnostic expectations induce sizeable welfare losses, the bulk of which could be …

. In the time series domain, this interaction emerges in a smooth version of Diagnostic Expectations (DE). Under smooth …

. In the time series domain, this interaction emerges in a smooth version of Diagnostic Expectations (DE). Under smooth …

Diagnostic expectations constitute a realistic behavioral model of inference. This paper shows that this approach for … technical treatment of diagnostic expectations in linear macroeconomic models. Diagnostic expectations generate endogenous … extrapolation in general equilibrium. We show that diagnostic expectations generate extra amplification in the presence of nominal …