Growth forecasts, belief manipulation and capital markets

Frederik Lundtofte*, Patrick Leoni

*Kontaktforfatter

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

Abstrakt

We analyze how a benevolent, privately informed government agency would optimally release information about the economy's growth rate when the agents hold heterogeneous beliefs. We model two types of agent: "conforming" and "dissenting." The former has a prior that is identical to that of the government agency, whereas the latter has a prior that differs from that of the government agency. We identify both informative and uninformative equilibria. Informative equilibria are equilibria in which the government agency's equilibrium signal leads to a revision of beliefs. We demonstrate that the uninformative equilibria can in fact dominate the informative ones in terms of ex post social welfare.

OriginalsprogEngelsk
TidsskriftEuropean Economic Review
Vol/bind70
Sider (fra-til)108-125
Antal sider18
ISSN0014-2921
DOI
StatusUdgivet - okt. 2014
Udgivet eksterntJa

Fingeraftryk

Dyk ned i forskningsemnerne om 'Growth forecasts, belief manipulation and capital markets'. Sammen danner de et unikt fingeraftryk.

Citationsformater