Small departures from rationality magnify fluctuations

Stéphane Gauthier (1)

1 CREM - Centre de recherche en économie et management

This note shows that introducing into the economy a few number of agents who do not support sunspots theories magnifies endogenous business cycles fluctuations when the current state of the economic system is sensitive enough to traders' forecasts, or equivalently, in presence of indeterminacy.

Mots clés: beliefs heterogeneity; rational expectations; sunspots

Domaines: Economies et finances

Stéphane Gauthier. Small departures from rationality magnify fluctuations. Economics Bulletin, 2004, 5 (5), pp.1-5. ⟨halshs-00106889⟩