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A NOTE ON LEARNING IN A CREDIT ECONOMY

Published online by Cambridge University Press:  17 October 2014

Pei Kuang
Pei Kuang*
Affiliation:
University of Birmingham
*
Address correspondence to: Pei Kuang, Economics Department, University of Birmingham, West Midlands B15 2TT, UK; e-mail: [email protected].
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Abstract

This paper introduces imperfect knowledge and learning behavior of economic agents into the Kiyotaki and Moore model and studies the interaction of agents' collateral price beliefs, collateral constraint, and aggregate economic activity over the business cycle. It establishes the E-stability condition and the convergence of the real time learning process. In addition, it shows that learning strengthens the role of collateral constraints in aggregate fluctuations.

Keywords

LearningCollateral ConstraintAggregate Fluctuations
Type
Notes
Information
Macroeconomic Dynamics , Volume 20 , Issue 3 , April 2016 , pp. 845 - 855
Copyright
Copyright © Cambridge University Press 2014 

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References

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