There is a widespread belief that changes in expectations may be an important independent driver of economic …

, however, that changes in expectations cannot generate positive co-movement between consumption, investment and employment in …

, expectations of higher future productivity raise the demand for new vintages of capital relative to installed capital. Capital …

and overconfidence. The expectations of optimistic agents are biased toward good outcomes, while overconfident agents …

What is the impact of surprise and anticipated policy changes when agents form expectations using adaptive learning … rather than rational expectations? We examine this issue using the standard stochastic real business cycle model with lump …-shaped response, and tend to be prominently characterized by oscillations not present under rational expectations. These fluctuations …

increase in government spending raises the demand for private goods and raises firms' expectations about what others will be …

2011 shifted expectations in oil markets, resulting in a price increase of between 3 and 13 dollars, depending on the …

What is the impact of surprise and anticipated policy changes when agents form expectations using adaptive learning … rather than rational expectations? We examine this issue using the standard stochastic real business cycle model with lump …-shaped response, and tend to be prominently characterized by oscillations not present under rational expectations. These fluctuations …