A NOTE ON LEARNING IN A CREDIT ECONOMY

Pei Kuang

Macroeconomic Dynamics, 2016, vol. 20, issue 3, 845-855

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.

Date: 2016
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Working Paper: A Note on Learning in a Credit Economy (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:cup:macdyn:v:20:y:2016:i:03:p:845-855_00

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