Hostname: page-component-586b7cd67f-rdxmf Total loading time: 0 Render date: 2024-11-23T00:05:40.569Z Has data issue: false hasContentIssue false

A NOTE ON LEARNING IN A CREDIT ECONOMY

Published online by Cambridge University Press:  17 October 2014

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].

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.

Type
Notes
Copyright
Copyright © Cambridge University Press 2014 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Adam, Klaus, Evans, George, and Honkapohja, Seppo (2006) Are hyperinflation oaths learnable? Journal of Economic Dynamics and Control 30, 27252748.CrossRefGoogle Scholar
Assenza, Tiziana and Berardi, Michele (2009) Learning in a credit economy. Journal of Economic Dynamics and Control 33, 11591169.Google Scholar
Branch, William, Davig, Troy, and McGough, Bruce (2013) Adaptive learning in regime-switching models. Macroeconomic Dynamics 17, 9981022.Google Scholar
Branch, William and Evans, George (2006) A simple recursive forecasting model. Economics Letters 91 (2), 158166.CrossRefGoogle Scholar
Bullard, James, Evans, George, and Honkapohja, Seppo (2010) A model of near-rational exuberance. Macroeconomic Dynamics 14, 166188.Google Scholar
Kiyotaki, Nobu and Moore, John (1997) Credit cycles. Journal of Political Economy 105, 211248.CrossRefGoogle Scholar
Kuang, Pei (2014) A model of housing and credit cycles with imperfect market knowledge. European Economic Review 70, 419437.CrossRefGoogle Scholar
Milani, Fabio (2007) Expectations, learning and macroeconomic persistence. Journal of Monetary Economics 54 (7), 20652082.Google Scholar
Mitra, Kaushik, Evans, George, and Honkapohja, Seppo (2013) Policy change and learning in the real business cycle model, Journal of Economic Dynamics and Control 37, 19471971.CrossRefGoogle Scholar