Eusepi (2009, International Journal of Economic Theory 5, pp. 9-23) analytically finds that a one-sector real business cycle model may exhibit positive co-movement between consumption and investment when the equilibrium wage-hours locus is positively-sloped and steeper than the household's labor...

In most economic models used for theoretical exploration or policy analysis, there is a crucial role for agents' expectations about future outcomes. Generally, it is assumed that economic agents take their decisions according to rationality principles and that they have a fairly accurate...