Optimal policy business cycles

Ginsburgh, Victor;Michel, P.
(1998) Journal of Economic Dynamics and Control — Vol. 22, n° 4, p. 503-518 (1998)

Files

pdfdocument.pdf
  • Restricted Access
  • Adobe PDF
  • 888.71 KB
Request a copy

Details

Authors
  • Ginsburgh, VictorUCLouvain
    Author
  • Michel, P.
    Author
Abstract
The effectiveness of economic policies depends on the nature of expectations. Under adaptive expectations, the Philipps curve allows a governement to 'surprise' agents. Under rational expectations, there is less room for economic policies. We assume that only an (endogenously determined) proportion of agents form rational expectations and show that this leads the government to optimal policies which result in a policy cycle with real effects. (C) 1998 Elsevier Science B.V. All rights reserved.
Affiliations

Citations

  • APA
  • Chicago
  • FWB

Ginsburgh, V., & Michel, P. (1998). Optimal policy business cycles. Journal of Economic Dynamics and Control, 22(4), 503-518. https://doi.org/10.1016/S0165-1889(97)00074-2 (Original work published 1998)