Rational Expectation Research Papers - Academia.edu (original) (raw)

The terms buyers' market and sellers' market are commonly used in contexts that most economists would characterize as excess supply and excess demand. It is puzzling, however, that in many instances the press and general public are all... more

The terms buyers' market and sellers' market are commonly used in contexts that most economists would characterize as excess supply and excess demand. It is puzzling, however, that in many instances the press and general public are all aware that it is a buyers' or sellers' market. Are these markets really that inefficient? We offer definitions of buyers' and sellers' markets that are consistent with a full rational expectations equilibrium in a simple general equilibrium search model of a heterogeneous durable goods market.

The purpose of this report is to review the evidence on the profitability of technical analysis. To achieve this purpose, the report comprehensively reviews survey, theoretical and empirical studies regarding technical trading strategies.... more

The purpose of this report is to review the evidence on the profitability of technical analysis. To achieve this purpose, the report comprehensively reviews survey, theoretical and empirical studies regarding technical trading strategies. We begin by overviewing survey studies that have directly investigated market participants’ experience and views on technical analysis. The survey literature indicates that technical analysis has been

The present study builds upon the seminal work of Engel and West [2005, Journal of Political Economy 113, 485-517] and in particular on the relationship between exchange rates and fundamentals. The paper discusses the well-known puzzle... more

The present study builds upon the seminal work of Engel and West [2005, Journal of Political Economy 113, 485-517] and in particular on the relationship between exchange rates and fundamentals. The paper discusses the well-known puzzle that fundamental variables such as money supplies, interest rates, outputs etc. provide help in predicting changes in floating exchange rates. It also tests the

The author describes a technique whereby students truthfully reveal their perceptions regarding the difficulty of an assignment. After completing the assignment, each student guesses his/her class' average score on the assignment. The... more

The author describes a technique whereby students truthfully reveal their perceptions regarding the difficulty of an assignment. After completing the assignment, each student guesses his/her class' average score on the assignment. The student is informed that if his/her guess is within one percentage point of the actual class average, then he/she will earn two extra points on the assignment. This mechanism gives each student the incentive to truly express his/her opinion regarding the difficulty of the assignment. The author provides evidence that students, as a group, are quite adept at guessing the class average. In addition to its usefulness in explaining the rational expectations hypothesis, this activity is helpful for assessing the students' perceptions of the difficulty of particular assignments.

At the end of the nineties, many developing countries featured an open capital market and relied heavily on dollar-debt financing of their economy. This paper analyses whether, in this context, clean floating can be a sustainable policy... more

At the end of the nineties, many developing countries featured an open capital market and relied heavily on dollar-debt financing of their economy. This paper analyses whether, in this context, clean floating can be a sustainable policy choice. The model is cast as a game between successive generations of investors who decide whether they buy or not the debt of a representative firm. The exchange rate is subject to random shocks, which makes uncertain the private sector’s solvency. We show that a small risk of insolvency would bring about a much larger risk of illiquidity. A rational expectation equilibrium without default can be put forward only in the highly improbable case when the currency is extremely overvalued. The case against flexible exchange rates may be stronger than usually thought.

Consumers purchase conspicuous goods to satisfy not only material needs but also social needs such as prestige. In an attempt to meet these social needs, producers of conspicuous goods like cars, perfumes, and watches, highlight the... more

Consumers purchase conspicuous goods to satisfy not only material needs but also social needs such as prestige. In an attempt to meet these social needs, producers of conspicuous goods like cars, perfumes, and watches, highlight the exclusivity of their products. In this paper, we propose a monopoly model of conspicuous consumption using the rational expectations framework, and then examine how purchase decisions are affected by the desire for exclusivity and conformity. We show that snobs can have an upward-sloping demand curve but only in the presence of consumers who are (weakly) followers. Laboratory tests lend support for this model prediction and for the rational expectations framework. The experimental results suggest that subjects used some degree of sophisticated thinking to arrive at their first-period decisions. Their behavior in the subsequent trials, however, can be adequately captured by a purely adaptive learning mechanism. We discuss the implications of consumer lear...

This paper examines the sources of fluctuations in inflation and output in two leading transitioneconomy candidates for admission to the European Union (EU), Poland and Hungary. Using a rational expectations, dynamic open economy... more

This paper examines the sources of fluctuations in inflation and output in two leading transitioneconomy candidates for admission to the European Union (EU), Poland and Hungary. Using a rational expectations, dynamic open economy aggregate supply- aggregate demand model, we consider real oil price, supply, balance of payments, demand, and monetary disturbances incorporating important features of transition economies such as balance

This paper empirically assesses the ability of dividend yields to predict future tock returns in Germany assuming efficient markets and rational expectations. Since the order of integration of repressors are not exactly known, a bound... more

This paper empirically assesses the ability of dividend yields to predict future tock returns in Germany assuming efficient markets and rational expectations. Since the order of integration of repressors are not exactly known, a bound procedure, namely a n autoregressive distributed lag (ARDL) model, is applied to test for cointegrating relationships among future stock returns and today’s divided yields. It

Page 1. Fiscal Policies and GrOWth in the World Economy T h Edition Jacob A. Frenkel and Assaf Razin with the collaboration of Chi-Wa Yuen Page 2. Page 3. Fiscal Policies and Growth in the World Economy This Om K14P-LG9-GNUW Page 4. Page... more

Page 1. Fiscal Policies and GrOWth in the World Economy T h Edition Jacob A. Frenkel and Assaf Razin with the collaboration of Chi-Wa Yuen Page 2. Page 3. Fiscal Policies and Growth in the World Economy This Om K14P-LG9-GNUW Page 4. Page 5. ...

Asymmetrically positioned retailers, who vary in the quality/in-store service offered, are increasingly using promotional advertising—the practice of advertising sale prices on familiar merchandise lines—to compete for customers who are... more

Asymmetrically positioned retailers, who vary in the quality/in-store service offered, are increasingly using promotional advertising—the practice of advertising sale prices on familiar merchandise lines—to compete for customers who are willing to comparison shop. The objective of this paper is to examine the role of promotional advertising for stores that vary in their quality positioning in competing for customers using a