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Producers’ expectations and the business cycle

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Rousakis, Michael (2011) Producers’ expectations and the business cycle. In: XVI Workshop on Dynamic Macroeconomics, Vigo, Spain, 29 Jun-01 Jul 2011 (Unpublished)

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Abstract

This paper isolates the role of expectations on the producers' side. Positive shocks to expectations, which can be due to shocks to producers' private information, transient productivity shocks, or positive `surprise' monetary policy shocks, are shown to cause increases in employment, output, and prices, but be in ationary only on impact and deflationary thereafter. A Friedman-rule emerges as the optimal monetary policy in this framework; however, a policy as aggressive on in ation as possible is a second-best policy.

Item Type: Conference Item (Paper)
Subjects: J Political Science > JC Political theory
Divisions: Faculty of Social Sciences > Economics
Date: 29 June 2011
Status: Not Peer Reviewed
Publication Status: Unpublished
Version or Related Resource: Rousakis, Michael (2011). Producers’ expectations and the business cycle. In: 10th Conference on Research in Economic Theory and Econometrics. Milos, Crete, 10-14 Jul 2011.
Conference Paper Type: Paper
Title of Event: XVI Workshop on Dynamic Macroeconomics
Type of Event: Conference
Location of Event: Vigo, Spain
Date(s) of Event: 29 Jun-01 Jul 2011
Related URLs:
URI: http://wrap.warwick.ac.uk/id/eprint/45601

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