Revisiting the Forecasts of Others

Ryan Chahrour and Kyle Jurado

No 33794, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In macroeconomic models with dispersed information, agents have an incentive to learn from endogenous variables, which themselves depend on the forecasts of others. This paper revisits the model of Townsend (1983) to characterize how this mechanism affects equilibrium dynamics. The first part of the paper simplifies, revises, and extends past results about situations when prices are fully revealing. The second part shows that full revelation does not occur in the original model and proves that the equilibrium state vector is infinite-dimensional. It also provides a new numerical solution procedure for such cases, which operates entirely in the frequency domain.

JEL-codes: D83 E20 E21 (search for similar items in EconPapers)
Date: 2025-05
Note: EFG ME
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