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Rational Expectations
Rational expectations is an economic theory that seeks to infer the macroeconomic consequences of individuals' decisions based on all available knowledge. It assumes that individuals' actions are based on the best available economic theory and information. History The concept of rational expectations was first introduced by John F. Muth in his paper "Rational Expectations and the Theory of Price Movements" published in 1961. Robert Lucas and Thomas Sargent further developed the theory in the 1970s and 1980s which became seminal works on the topic and were widely used in microeconomics. Significant Findings Muth’s work introduces the concept of rational expectations and discusses its implications for economic theory. He argues that individuals are rational and use all available information to make unbiased, informed predictions about the future. This means that individuals do not make systematic errors in their predictions and that their predictions are not biased by past er ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Macroeconomic
Macroeconomics is a branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study topics such as output/ GDP (gross domestic product) and national income, unemployment (including unemployment rates), price indices and inflation, consumption, saving, investment, energy, international trade, and international finance. Macroeconomics and microeconomics are the two most general fields in economics. The focus of macroeconomics is often on a country (or larger entities like the whole world) and how its markets interact to produce large-scale phenomena that economists refer to as aggregate variables. In microeconomics the focus of analysis is often a single market, such as whether changes in supply or demand are to blame for price increases in the oil and automotive sectors. From introductory classes in "principles of economics" through doctora ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Factors Of Production
In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilised amounts of the various inputs determine the quantity of output according to the relationship called the production function. There are four ''basic'' resources or factors of production: land, labour, capital and entrepreneur (or enterprise). The factors are also frequently labeled "producer goods or services" to distinguish them from the goods or services purchased by consumers, which are frequently labeled "consumer goods". There are two types of factors: ''primary'' and ''secondary''. The previously mentioned primary factors are land, labour and capital. Materials and energy are considered secondary factors in classical economics because they are obtained from land, labour, and capital. The primary factors facilitate production but neither become part of the product (as with raw materials) nor become significantly tran ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
A Dictionary Of Economics
A, or a, is the first letter and the first vowel letter of the Latin alphabet, used in the modern English alphabet, and others worldwide. Its name in English is '' a'' (pronounced ), plural ''aes''. It is similar in shape to the Ancient Greek letter alpha, from which it derives. The uppercase version consists of the two slanting sides of a triangle, crossed in the middle by a horizontal bar. The lowercase version is often written in one of two forms: the double-storey and single-storey . The latter is commonly used in handwriting and fonts based on it, especially fonts intended to be read by children, and is also found in italic type. In English, '' a'' is the indefinite article, with the alternative form ''an''. Name In English, the name of the letter is the ''long A'' sound, pronounced . Its name in most other languages matches the letter's pronunciation in open syllables. History The earliest known ancestor of A is ''aleph''—the first letter of the Phoenician ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Maarten Janssen
Maarten Christiaan Wilhelmus Janssen (born September 19, 1962 in Breda) is a Dutch economist and university professor of microeconomics at the University of Vienna. He is particularly known for his work on consumer search behavior and auction theory. Education Janssen studied econometrics and philosophy of economics at the University of Groningen, where he received his PhD in 1990. From 1997 to 2008, he was professor of microeconomics at Erasmus University Rotterdam and director of the Tinbergen Institute from 2004 to 2009. Since 2008, Janssen has been professor of microeconomics at the Department of Economics, University of Vienna. Scientific contribution Janssen's research focus is theoretical industrial economics. In particular, he conducts research on consumer search behavior and auctions, and has made several methodological contributions in the area of consumer search theory. In addition, Janssen has launched a new subfield that studies the effects of consumer search i ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Rationality
Rationality is the quality of being guided by or based on reason. In this regard, a person acts rationally if they have a good reason for what they do, or a belief is rational if it is based on strong evidence. This quality can apply to an ability, as in a rational animal, to a psychological process, like reasoning, to mental states, such as beliefs and intentions, or to persons who possess these other forms of rationality. A thing that lacks rationality is either ''arational'', if it is outside the domain of rational evaluation, or '' irrational'', if it belongs to this domain but does not fulfill its standards. There are many discussions about the essential features shared by all forms of rationality. According to reason-responsiveness accounts, to be rational is to be responsive to reasons. For example, dark clouds are a reason for taking an umbrella, which is why it is rational for an agent to do so in response. An important rival to this approach are coherence-based ac ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Perfectionism (psychology)
Perfectionism, in psychology, is a broad personality trait characterized by a person's concern with striving for flawlessness and perfection and is accompanied by critical self-evaluations and concerns regarding others' evaluations. It is best conceptualized as a multidimensional and multilayered personality characteristic, and initially some psychologists thought that there were many positive and negative aspects. Maladaptive perfectionism drives people to be concerned with achieving unattainable ideals or unrealistic goals that often lead to many forms of adjustment problems such as depression, anxiety, OCD, OCPD and low self-esteem. These adjustment problems often lead to suicidal thoughts and tendencies and influence or invite other psychological, physical, social, and further achievement problems in children, adolescents, and adults. Although perfectionist sights can reduce stress, anxiety, and panic, recent data, compiled by British psychologists Thomas Curran and ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Optimism Bias
Optimism bias or optimistic bias is a cognitive bias that causes someone to believe that they themselves are less likely to experience a negative event. It is also known as unrealistic optimism or comparative optimism. It is common and transcends gender, ethnicity, nationality, and age. Autistic people are less susceptible to this kind of bias. It has also been reported in other animals, such as rats and birds. Four factors can cause a person to be optimistically biased: their desired end state, their cognitive mechanisms, the information they have about themselves versus others, and overall mood. The optimistic bias is seen in a number of situations. For example: people believing that they are less at risk of being a crime victim, smokers believing that they are less likely to contract lung cancer or disease than other smokers, first-time bungee jumpers believing that they are less at risk of an injury than other jumpers, or traders who think they are less exposed to potential l ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Optimism
Optimism is the Attitude (psychology), attitude or mindset of expecting events to lead to particularly positive, favorable, desirable, and hopeful outcomes. A common idiom used to illustrate optimism versus pessimism is Is the glass half empty or half full?, a glass filled with water to the halfway point: an optimist is said to see the glass as half full, while a pessimist sees the glass as half empty. In ordinary English, optimism may be synonymous with ''idealism''—often, unrealistic or foolish optimism in particular. The term derives from the Latin , meaning "best". To be optimistic, in the typical sense of the word, is to expect the best possible outcome from any given situation. This is usually referred to in psychology as dispositional optimism. It reflects a belief that future conditions will work out for the best. As a trait theory, trait, it fosters Psychological resilience, resilience in the face of Psychological stress, stress. Theories of optimism include dis ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Lucas Island Model
The Lucas islands model is an economic model of the link between money supply and price and output changes in a simplified economy using rational expectations. It delivered a new classical explanation of the Phillips curve relationship between unemployment and inflation. The model was formulated by Robert Lucas, Jr. in a series of papers in the 1970s. Description The model contains a group of N islands, with one individual on each. Each individual produces some quantity Y, which can be bought for some amount of money M. Individuals use money a given number of times to buy a certain quantity of goods which cost a certain price. In the quantity theory of money, this is expressed as MV = PY, where money supply times velocity equals price times output. Lucas then introduced variation in the price level. This can occur through changes in the local price level of individual islands due to increased or decreased demand (i.e. asymmetric preferences, z) or through stochastic processe ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Lucas Critique
The Lucas critique argues that it is naïve to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, especially highly aggregated historical data. More formally, it states that the decision rules of Keynesian models—such as the consumption function—cannot be considered as structural in the sense of being invariant with respect to changes in government policy variables. It was named after American economist Robert Lucas's work on macroeconomic policymaking. The Lucas critique is significant in the history of economic thought as a representative of the paradigm shift that occurred in macroeconomic theory in the 1970s towards attempts at establishing micro-foundations. Thesis The Lucas critique was not new in 1976. The argument and the whole logic was first presented by Frisch (1938) and discussed by Haavelmo (1944), among others. Related ideas are expressed as Campbell's law and Goodhart's law� ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Lucas Aggregate Supply Function
The Lucas aggregate supply function or Lucas "surprise" supply function, based on the Lucas imperfect information model, is a representation of aggregate supply based on the work of new classical economist Robert Lucas. The model states that economic output is a function of money or price "surprise". The model accounts for the empirically based trade off between output and prices represented by the Phillips curve, but the function breaks from the Phillips curve since only unanticipated price level changes lead to changes in output. The model accounts for empirically observed short-run correlations between output and prices, but maintains the neutrality of money (the absence of a price or money supply relationship with output and employment) in the long-run. The policy ineffectiveness proposition extends the model by arguing that, since people with rational expectations cannot be systematically surprised by monetary policy, monetary policy cannot be used to systematically influenc ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
