Rational Sunspots
dc.contributor.author | Ascari, Guido | |
dc.contributor.author | Banomolo, Paolo | |
dc.contributor.author | HEDIBERT FREITAS LOPES | |
dc.coverage.cidade | São Paulo | pt_BR |
dc.coverage.pais | Brasil | pt_BR |
dc.creator | Ascari, Guido | |
dc.creator | Banomolo, Paolo | |
dc.date.accessioned | 2023-07-26T05:39:40Z | |
dc.date.available | 2023-07-26T05:39:40Z | |
dc.date.issued | 2016 | |
dc.description.abstract | The instability of macroeconomic variables is usually ruled out by rational expectations. We propose a generalization of the rational expectations framework to estimate possible temporary unstable paths. Our approach yields drifting parameters and stochastic volatility. The methodology allows the data to choose between diferent possible alternatives: determinacy, indeterminacy and instability. We apply our methodology to US inflation dynamics in the '70s through the lens of a simple New Keynesian model. When unstable RE paths are allowed, the data unambiguously select them to explain the stagflation period in the '70s. Thus, our methodology suggests that US inflation dynamics in the '70s is better described by unstable rational equilibrium paths. | |
dc.description.other | The instability of macroeconomic variables is usually ruled out by rational ex pectations. We propose a generalization of the rational expectations framework to estimate possible temporary unstable paths. Our approach yields drifting pa rameters and stochastic volatility. The methodology allows the data to choose between di§erent possible alternatives: determinacy, indeterminacy and instabil ity. We apply our methodology to US ináation dynamics in the í70s through the lens of a simple New Keynesian model. When unstable RE paths are allowed, the data unambiguously select them to explain the stagáation period in the ë70s. Thus, our methodology suggests that US ináation dynamics in the í70s is better described by unstable rational equilibrium paths. | pt_BR |
dc.format.extent | 51 p. | pt_BR |
dc.format.medium | Digital | pt_BR |
dc.identifier.issue | BEWP 226/2016 | |
dc.identifier.uri | https://repositorio.insper.edu.br/handle/11224/5974 | |
dc.language.iso | Inglês | pt_BR |
dc.publisher | Insper | pt_BR |
dc.relation.ispartofseries | Insper Working Paper | pt_BR |
dc.rights.license | O INSPER E ESTE REPOSITÓRIO NÃO DETÊM OS DIREITOS DE USO E REPRODUÇÃO DOS CONTEÚDOS AQUI REGISTRADOS. É RESPONSABILIDADE DO USUÁRIO VERIFICAR OS USOS PERMITIDOS NA FONTE ORIGINAL, RESPEITANDO-SE OS DIREITOS DE AUTOR OU EDITOR | pt_BR |
dc.subject.keywords | Rational Expectations | pt_BR |
dc.subject.keywords | Sunspots | pt_BR |
dc.subject.keywords | Instability | pt_BR |
dc.subject.keywords | Indeterminacy | pt_BR |
dc.subject.keywords | Inflation | pt_BR |
dc.subject.keywords | Monetary Policy | pt_BR |
dc.title | Rational Sunspots | pt_BR |
dc.type | working paper | |
dspace.entity.type | Publication | |
local.subject.cnpq | Ciências Exatas e da Terra | pt_BR |
local.subject.cnpq | Ciências Sociais Aplicadas | pt_BR |
local.type | Working Paper | pt_BR |
relation.isAuthorOfPublication | 41f844cb-0e5a-4ef1-bb19-5ab1cec8e2ca | |
relation.isAuthorOfPublication.latestForDiscovery | 41f844cb-0e5a-4ef1-bb19-5ab1cec8e2ca |
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