Agent-Based Learning in 'Islands' with 'Sticky Information': An Explanation for the Persistence of Real Effects

Easaw, Joshy ORCID: https://orcid.org/0000-0003-3476-4300 and Ghoshray, Atanu 2006. Agent-Based Learning in 'Islands' with 'Sticky Information': An Explanation for the Persistence of Real Effects. Journal of Money, Credit and Banking 38 (1) , pp. 263-268. 10.1353/mcb.2006.0015

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Abstract

This paper outlines a model where a household forms subjective expectations about his income by 'anchoring' on a professional's forecasts of the aggregate economy. Hence, the household is able to form relative (or real) income expectations. However, he observes the professional's forecasts imperfectly and only adjusts his expectations partially. Using the 'Lucas-Phelps Island' scenario, set in the context of households, we show how persistence of real effects could arise in such a scenario.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
ISSN:	1538-4616
Date of Acceptance:	2 February 2005
Last Modified:	26 Oct 2022 08:17
URI:	https://orca.cardiff.ac.uk/id/eprint/127073

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