Implications of Learning for Economic Models of Uncertainty

Abstract

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After Keynesian macroeconomics

“…As has been known for a long time, such stochastic difference equations generate series that "look like" economic time series. Further, if viewed as structural (i.e., invariant with respect to policy For example, see Crawford [5 ] and Grossman [ 11 ].…”

After Keynesian Macroeconomics

“…Both of these assumptions can be abandoned, albeit at a cost in terms of the simplicity of the model. (For example, see Crawford 1971 andGrossman 1975. ) In fact, within the framework of quadratic objective functions, in which the "separation principle" applies, one can apply the Kalman filtering formula to derive optimum linear decision rules with time dependent coefficients.…”