Economics at your fingertips  

Knowing the Forecasts of Others

Joseph Pearlman () and Thomas Sargent ()

Review of Economic Dynamics, 2005, vol. 8, issue 2, 480-497

Abstract: We apply recursive methods to obtain a finite dimensional and recursive representation of an equilibrium of one of Townsend's models of 'forecasting the forecasts of others'. The equilibrium has the property that decision makers make common forecasts of the hidden state variable whose presence motivates them to pay attention to prices in other markets. Thus, the model has too few sources of randomness to put decision makers into a situation where they should form 'higher order beliefs' (i.e., beliefs about others' beliefs). In Townsend's model, they know the beliefs of others because they share them. We attain our finite-dimensional recursive representation by applying methods of Pearlman, Currie, and Levine (1986). (Copyright: Elsevier)

Keywords: Forecasting the forecasts of others; higher order beliefs; pooling equilibrium; recursive methods; Kalman filter. (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22) Track citations by RSS feed

Downloads: (external link) Full text (application/pdf)
Access to full texts is restricted to ScienceDirect subscribers and ScienceDirect institutional members. See for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/

DOI: 10.1016/

Access Statistics for this article

Review of Economic Dynamics is currently edited by Jonathan Heathcote and Vincenzo Quadrini

More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().

Page updated 2019-08-20
Handle: RePEc:red:issued:v:8:y:2005:i:2:p:480-497