A Model of Macroeconomic Activity. Vol. I: The Theoretical Model. Ray C. Fair
In: Journal of political economy, Band 84, Heft 1, S. 189-192
ISSN: 1537-534X
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In: Journal of political economy, Band 84, Heft 1, S. 189-192
ISSN: 1537-534X
In: The Canadian Journal of Economics, Band 8, Heft 2, S. 205
In: Bulletin of economic research, Band 49, Heft 3, S. 231-252
ISSN: 1467-8586
This paper analyzes the equilibrium of an economy where economic agents differ with respect to their information gathering and processing abilities. Our results depend on the magnitude of the relative risk aversion. We show that the unsophisticated (with respect to their information processing abilities) agents are disproportionately important in the cases of both large and small risk aversion. In the case of the relative risk aversion measure being greater than unity volatility of aggregate consumption is reduced. This supports the view that observed consumption in many countries fluctuates less than predicted by models with fully rational agents only.
Regional Science and Urban Economics 21 (1991) 1-30. doi:10.1016/0166-0462(91)90051-N ; Received by publisher: 0000-01-01 ; Harvest Date: 2016-01-04 12:21:24 ; DOI:10.1016/0166-0462(91)90051-N ; Page Range: 1-30
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Regional Science and Urban Economics 21 (1991) 1-30. doi:10.1016/0166-0462(91)90051-N ; 2016-03-04T18:46:49Z
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