The Wobbly Economy: Global Dynamics with Phase and State Transitions

Hirano, Toshisuke; Stiglitz, Joseph E.

doi:10.3386/w29806

Cited by 3 publications

(2 citation statements)

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“…See, e.g. Cass and Stiglitz (1969) and Hirano and Stiglitz (2019). 67 Nothing, of course, was said about the stability of the system.…”

Section: Discussionmentioning

confidence: 99%

“…Behavior may depend on more than the expected value of a distribution, but on its entire shape. RE equilibria require that in such a situation, the individuals' beliefs about the shape of the distribution coincide with the observed (conditional) relative frequencies.16 Matters are even worse:Hirano and Stiglitz (2019) have shown that there may be an infinity of rational expectations trajectories. 17 Within a wide literature, seeBray (1982);Bray and Kreps (1987);Marcet and Sargent (1989) and the discussions in Honkapohja (1999, 2001).…”

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confidence: 99%

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Rational Heuristics? Expectations and Behaviors in Evolving Economies With Heterogeneous Interacting Agents

et al. 2020

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We analyze the individual and macroeconomic impacts of heterogeneous expectations and action rules within an agent-based model populated by heterogeneous, interacting firms. Agents have to cope with a complex evolving economy characterized by deep uncertainty resulting from technical change, imperfect information, coordination hurdles, and structural breaks. In these circumstances, we find that neither individual nor macroeconomic dynamics improve when agents replace myopic expectations with less naïve learning rules. Our results suggest that fast and frugal robust heuristics may not be a second-best option but rather "rational" responses in complex and changing macroeconomic environments. (JEL C63, D8, E32, E6, O4)

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“…See, e.g. Cass and Stiglitz (1969) and Hirano and Stiglitz (2019). 67 Nothing, of course, was said about the stability of the system.…”

Section: Discussionmentioning

confidence: 99%

mentioning

confidence: 99%

Rational Heuristics? Expectations and Behaviors in Evolving Economies With Heterogeneous Interacting Agents

et al. 2020

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On optimal extinction in the matchbox two-sector model

2022

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Climate change and growth

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Stiglitz

2023

Industrial and Corporate Change

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Contrary to much of the conventional wisdom, taking stronger actions on climate change may enhance economic growth, even as conventionally measured, but even more so, in terms of societal well-being. We identify the flaws in the models and analyses which contend that there must be a trade-off and explain the mechanisms and dynamic forces which have the potential to enhance growth. Critically, there are numerous market failures that result in suboptimal economic performance. We explain how addressing climate change reduces the bite of these failures and enhances the incentives and political will to address them. We identify packages of policies that alleviate market failures, enhance growth, and reduce carbon emissions. Finally, we argue that the green transition is coming at a time when, both because of persistent deficiencies of aggregate demand and advances in technology, including artificial intelligence and robotization, the macroeconomic opportunity costs of strong climate actions may be especially low and the benefits particularly high.

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The Wobbly Economy: Global Dynamics with Phase and State Transitions

Cited by 3 publications

References 48 publications

Rational Heuristics? Expectations and Behaviors in Evolving Economies With Heterogeneous Interacting Agents

Rational Heuristics? Expectations and Behaviors in Evolving Economies With Heterogeneous Interacting Agents

On optimal extinction in the matchbox two-sector model

Climate change and growth

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