Expectations and Adjustment
An Alternative Approach with an Application to Overlapping Wage Contracts
Bibliographic Data
| ID | 9725325 |
|---|---|
| Authors | James Pemberton (corresponding author) |
| Year | 1988 |
| Volume | 55 |
| Issue | 219 |
| Pages | 379 |
| Publication date | 1988-08-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Economica (JOURNAL) |
| Journal identifiers | ISSN: 0013-0427 • E-ISSN: 1468-0335 |
| Publisher | JSTOR (PUBLISHER) |
| DOI | 10.2307/2554015 |
| OpenAlex | W2053643732 |
| Language | EN |
| Citations received | 1 |
| References cited | 6 |
In many contexts, individual agents' behavior depends on their expectations of other agents' expectations, about which there is no available source of objective information. Standard rational expectations models have avoided, not resolved, this problem. This paper models an alternative approach involving asymmetric adjustment in response to exogenous shocks. This is applied to a model of overlapping wage contracts and causes wages to fall slower in response to deflationary shocks than they rise in response to expansionary shocks. This contrasts with standard overlapping contract models incorporating rational expectations in which adjustment is symmetric. Copyright 1988 by The London School of Economics and Political Science
Economics · Labour economics · Microeconomics · Wage · Economic theories and models · Economic Theory and Policy · Monetary Policy and Economic Impact
| Unique citing works | 1 |
|---|---|
| Citations per year | 0,03 |
| Citation span | 1989 - 1989 (1) |
| Citation velocity | historical |
| Highly cited | No |