Christophre Georges

Adjustment costs and indeterminacy in perfect foresight models

Abstract This paper suggests a method for resolving indeterminacy of equilibrium in perfect foresight models and applies it to several existing models. Quadratic adjustment costs are introduced into models with multiple equilibria, and the limiting behavior of the resulting solutions is studied as the adjustment costs go to zero. The method is shown to be useful in selecting among feasible equilibria in examples in which there is local indeterminacy.

Emphasizing Controversy in the Economics Curriculum

(1991). Emphasizing Controversy in the Economics Curriculum. The Journal of Economic Education: Vol. 22, No. 3, pp. 235-240.

Bounded memory, overparameterized forecast rules, and instability

We consider an environment in which traders with finite memory update their forecast rules at random intervals by OLS. In this context, overparameterization of the forecast rules can destabilize the learning dynamics. This instability tends to be attenuated by greater memory and less frequent updating.

Product Innovation and Macroeconomic Dynamics

We develop an agent-based macroeconomic model in which product innovation is the fundamental driver of growth and business cycle fluctuations. The model builds on a hedonic approach to the product space and product innovation developed in Georges (2011).

Adjustment costs, learning, and indeterminacy

Abstract I compare the adjustment cost and learning approaches to resolving indeterminacy of perfect foresight equilibrium in a continuous time model with local indeterminacy. Rapid learning tends to select different perfect foresight equilibria of the original model than does the inclusion of vanishing adjustment costs. This difference has implications for the dynamic response of the economy to unanticipated shocks.

Unemployment persistence under profit sharing

Abstract In a simple dynamic model with an employment externality generated by union bargaining, an increase in a mandated rate of profit sharing reduces not only the steady-state unemployment rate but also the persistence of unemployment out of steady state