Is Elegance Useful? Rationality in the Dynamic and Optimal Economic Model
Date
2013-05-10
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Abstract
The purpose of this thesis is to discuss the development of the macroeconomic models in perspective and analyze recent models dominating the economics theory along with discussing a new dynamic model which considers all criticisms of the prior models and incorporates different approaches to the economic fluctuations. I am representing several crucial modifications in this model. After running several experiments, the model claimed that incorporating rational expectations in the model helps to present better predictions regarding the economy.
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macroeconomic model, dynamic model, economic fluctuation, rational expectations, Keynes, IS-LM Model, DAD-DAS model, demand shock, supply shock, risk shock, Alpanda, Honig and Woglom, Taylor Rule, Okun's Law, Philips Curve