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Imperfect competition and the modelling of expectations in macroeconomics
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Rankin, Neil (2007) Imperfect competition and the modelling of expectations in macroeconomics. Portuguese Economic Journal, Vol.6 (No.3). pp. 133-150. doi:10.1007/s10258-007-0020-2 ISSN 1617-982X.
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Official URL: http://dx.doi.org/10.1007/s10258-007-0020-2
Abstract
We show that when a model of the macroeconomy is based on imperfect, rather than perfect, competition, this may increase the problem of how to model agents' expectations. We provide a simple example using an overlapping-generations economy with the potential for unemployment. Under certain assumptions about how consumers migrate between locations between the first and second periods of their lives, this extra issue regarding expectations arises. Imperfect competition may increase agents' forecasting difficulties because they have to forecast not only future equilibrium prices, but also future out-of-equilibrium prices, and by definition the latter are never actually observed.
Item Type: | Journal Article | ||||
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Subjects: | H Social Sciences > HC Economic History and Conditions | ||||
Divisions: | Faculty of Social Sciences > Economics | ||||
Journal or Publication Title: | Portuguese Economic Journal | ||||
Publisher: | Springer | ||||
ISSN: | 1617-982X | ||||
Official Date: | December 2007 | ||||
Dates: |
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Volume: | Vol.6 | ||||
Number: | No.3 | ||||
Number of Pages: | 18 | ||||
Page Range: | pp. 133-150 | ||||
DOI: | 10.1007/s10258-007-0020-2 | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Restricted or Subscription Access |
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