Confidence and the Propagation of Demand Shocks
We revisit the question of why shifts in aggregate demand drive business cycles. Our theory combines intertemporal substitution in production with rational confusion, or bounded rationality, in consumption and investment. The first element allows aggregate supply to respond to shifts in aggregate de...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Oxford University Press
2022
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| Subjects: | |
| Online Access: | View Fulltext in Publisher |