A predictive multi-agent approach to model systems with linear rational expectations

Moeen Mostafavi, Ali-Reza Fatehi, Hamed Shakouri G. and Peter von zur Muehlen ()

MPRA Paper from University Library of Munich, Germany

Abstract: Expectation formation plays a principal role in economic systems. We examine and revise the standard rational expectations (RE) model, generally taken as the best paradigm for expectations modelling, and suggest a new method to model rational expectations. Conventional conditions that assert the stability and uniqueness of popular solution methods are shown to be insufficient. The agent-based new modelling approach suggested in this paper will be shown to lead to uniquely stable solutions.

Keywords: Rational expectation; Predictive control; Economics dynamic (search for similar items in EconPapers)
JEL-codes: C51 C61 C63 D84 (search for similar items in EconPapers)
Date: 2011-01-08, Revised 2011-12-11
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