The Role of Expectations in Econometric Model Multipliers - An Illustrative Extension of the ESRI Short-Run Macroeconomic Model -(in Japanese)

Keiko Murata and Daiju Aoki

ESRI Discussion paper series from Economic and Social Research Institute (ESRI)

Abstract: This paper attempts to introduce forward-looking expectations to the ESRI Short-Run Macroeconomic Model. The effects of changes in fiscal and monetary policy are evaluated under two alternative expectation formations, namely, adaptive expectations and forward-looking ones. For the latter, whether the shocks are either anticipated or unanticipated is also considered. Although the model is a tentative version in which agents' expectations are not formed in a strictly "model-consistent" manner, the simulation results show that adjustment mechanism after a shock is affected by how expectations are treated in the model.

Pages: 33 pages
Date: 2004-06
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Persistent link: https://EconPapers.repec.org/RePEc:esj:esridp:110

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