Small departures from rationality magnify fluctuations

Stephane Gauthier

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Abstract: This note shows that introducing into the economy a few number of agents who do not support sunspots theories magnifies endogenous business cycles fluctuations when the current state of the economic system is sensitive enough to traders' forecasts, or equivalently, in presence of indeterminacy.

Keywords: beliefs heterogeneity; rational expectations; sunspots (search for similar items in EconPapers)
Date: 2004
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Published in Economics Bulletin, 2004, 5 (5), pp.1-5

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00106889

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