What factors and processes influence the wealth of nations? This is the central question addressed by Professor North and his colleagues John Wallis and Barry Weingast (NWW) (2009) in their framework for “interpreting recorded human history.” In attempting to address this question, NWW develop a conceptual framework for understanding how institutions shape the organizations necessary for cooper...

Abstract The well-documented rise in political polarization among the U.S. electorate over past 20 years has been accompanied by a substantial increase effect of partisan bias on survey-based measures economic expectations. Individuals have more optimistic view future conditions when they are closely affiliated with party that controls White House, and this tendency increased significantly time...

Inflation expectations have been of prime interest for policymakers and researchers decades. In 2023, when high inflation is one the biggest challenges facing world, economists must give them due weight. This article provides a systematic chronological treatment main approaches to formation modelling in macroeconomics. While number surveys with focus on separate models are available, full treat...

This paper analyzes the transmission mechanism of monetary policy in an emerging market economy like Mexico. The analysis emphasizes the importance of economic agents’ expectations – mainly inflation expectations and country-risk perception – to understand the effects of monetary policy in emerging market economies. It is shown that both, economic agents’ expectations and the correct identifica...

Using a representative online panel from the U.S., we examine how people update their economic expectations and alter their economic behavior in response to changes in their macroeconomic expectations. We collect novel data on people’s subjective expectations regarding the probability of a recession and create exogenous variation in these expectations by providing respondents with di↵erent prof...

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 ...