I review the literature on financial speculation driven by belief disagreements from a macroeconomics perspective. To highlight unifying themes, develop stylized macroeconomic model that embeds several mechanisms. With short-selling constraints, can generate overvaluation and speculative bubbles. Leverage substantially inflate bubbles, leverage limits depend perceived downside risks. Shifts in ...

This research discusses a new paradigm in Islamic macroeconomics, where conventional macroeconomic instruments, namely interest, have not been able to carry out or reduce the number of national crises that often occur Indonesia. is descriptive qualitative with Literature review approach. The results obtained, macroeconomics instruments can flatten economy, instrument question profit sharing sys...

Among mainstream academic economists and policymakers, the leading alternative to the real business cycle theory is the New Keynesian model. Whereas the real business cycle model features monetary neutrality and emphasizes that there should be no active stabilization policy by governments, the New Keynesian model builds in a friction that generates monetary non-neutrality and gives rise to a we...

■ Abstract We review the use of macroeconomics in political science over the past 40 years. The field has been dominated by new classical theory, which leaves little room for economic policy and focuses attention on what democratic governments can do wrong in the short term. The resulting literatures on political business cycles and central bank independence are large and sophisticated, but the...

We offer an extensive summary and a critical discussion of the empirical literature on the impact of human capital on macro-economic performance, with a particular focus on UK policy. We also highlight methodological issues and make recommendations for future research priorities. Taking the studies as a whole, the evidence that human capital increases productivity is compelling, though still la...

This paper provides an alternative to the theory of rational expectations (RE). Its central idea is that the information set on which agents will choose to condition their expectations will not, in general, include all the available information. Our alternative has many of the attractive features of RE; it emerges from an explicit choice-theoretic framework; it has wide applicability; and it ca...

This paper deals with hyperbolic discounting in a macro context. Time consistency is discussed in terms of rational behavior and rational expectations. The theory is applied to the intertemporal consumption decision in order to explain undersaving in an economy. Moreover, possible implications on policy makers’ decisions on reforms and budget deficits are evinced. Finally, the Ricardian equival...