BACE failures lower AD expectations, again

Expectations Traps and Coordination Failures: Selecting among Multiple Discretionary Equilibria

Discretionary policymakers cannot manage private-sector expectations and cannot coordinate the actions of future policymakers. As a consequence, expectations traps and coordination failures can occur and multiple equilibria can arise. To utilize the explanatory power of models with multiple equilibria it is first necessary to understand how an economy arrives to a particular equilibrium. In thi...

Interpreting the Statistical Failures of Some Rational Expectations Macroeconomic Models

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Expectations Traps and Coordination Failures with Discretionary Policymaking

Discretionary policymakers cannot manage private-sector expectations and cannot coordinate the actions of future policymakers. As a consequence, expectations traps and coordination failures can occur and multiple equilibria can arise. To utilize the explanatory power of models with multiple equilibria it is first necessary to understand how an economy arrives to a particular equilibrium. In thi...

Computing Lower Expectations with Kuznetsov's Independence Condition

Kuznetsov’s condition says that variables X and Y are independent when any product of bounded functions f X and g Y behaves in a certain way: the interval of expected values f X g Y must be equal to the interval product f X g Y . The main result of this paper shows how to compute lower expectations using Kuznetsov’s condition. We also generalize Kuznetsov’s condition to conditional expectation ...

Phosphorylation of BACE