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Optimal policy business cycles

par Ginsburgh, Victor ;Michel, Philippe
Référence Journal of Economic Dynamics and Control, 22, 4, page (503-518)
Publication Publié, 1998

Article révisé par les pairs

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Résumé :

The effectiveness of economic policies depends on the nature of expectations. Under adaptive expectations, the Philipps curve allows a governement to 'surprise' agents. Under rational expectations, there is less room for economic policies. We assume that only an (endogenously determined) proportion of agents form rational expectations and show that this leads the government to optimal policies which result in a policy cycle with real effects