Content area
Abstract
Expectations of future economic events have long been recognized as significant factors in current economic decision-making. This dissertation presents three models of a dynamic general equilibrium economy and examines various aspects of the way in which expectations can affect economic equilibrium.
The first essay examines the structure of the equilibrium price set in a temporary equilibrium framework with expectations formed exogenously, and provides conditions which guarantee the existence of monetary temporary equilibrium.
The second essay explores the question of whether rational market processes (generated by assuming agents have rational expectations) can nevertheless give rise to irrational equilibrium outcomes which reflect uncertainty in beliefs even though no market fundamentals are uncertain. The model used is a simple dynamic macroeconomic model, and extends previous work done by Azariadis.
The third essay examines the question of existence of rational expectations equilibria in a general, multi-commodity overlapping generations model. The primary result of this essay is that, except for a small set of preferences, there cannot exist stationary rational expectations equilibria, unless there is but a single commodity available in each period of time.
