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Author
Dudek Maciej K. (Szkoła Główna Handlowa w Warszawie)
Title
Volatility as a Choice,
Source
Prace i Materiały Instytutu Rozwoju Gospodarczego / Szkoła Główna Handlowa, 2013, nr 93, s. 71-122, rys., bibliogr. 23 poz.
Issue title
Expectations and Forecasting
Keyword
Zmienna objaśniana, Racjonalność, Zmienność, Podmioty gospodarcze
Endogenous variable, Rationality, Variability, Business entity
Note
summ.
Abstract
Human beliefs, while always remaining in equilibrium, serve as an equilibrium selector and determine the degree of aggregate volatility. Fully rational and risk averse economic agents expect macro-level dynamics to be characterised by a specific degree of volatility. Given this expectation the agents respond rationally by building up higher buffer stock savings in response to perceived volatility. The economy, given the change in individual behaviour, responds, the process of physical capital formation is endogenously altered, and it displays volatility that is in line with the initial expectation of rational economic agents. As a result, the beliefs, while being self-confirming, determine endogenously the degree of volatility at the aggregate level.(original abstract)
Accessibility
The Main Library of the Cracow University of Economics
The Library of Warsaw School of Economics
The Library of University of Economics in Katowice
The Main Library of the Wroclaw University of Economics
Bibliography
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Cited by
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ISSN
0866-9503
Language
eng
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