Confidence, Crashes and Animal Spirits

@article{Farmer2009ConfidenceCA,
  title={Confidence, Crashes and Animal Spirits},
  author={Roger E. A. Farmer},
  journal={FEN: Behavioral Finance (Topic)},
  year={2009}
}
  • R. Farmer
  • Published 1 April 2009
  • Economics
  • FEN: Behavioral Finance (Topic)
This paper presents a model of the macroeconomy that reformulates what I take to be two important ideas from Keynes General Theory. The first is that there may be a continuum of steady state unemployment rates. The second is that beliefs select an equilibrium. I argue that search and matching costs in the labor market lead to the existence of a continuum of equilibria and I resolve the resulting indeterminacy by assuming that the beliefs of stock market participants are self-fulfilling. The… 
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  • R. Farmer
  • Economics
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  • 2010
This paper describes research that integrates Keynesian and Walrasian economics in a new way. The author develops a model in which high unemployment can persist and any unemployment rate can occur as
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This paper presents a theory of the monetary transmission mechanism in a monetary version of Farmer's (2009) model in which there are multiple equilibrium unemployment rates. The model has two
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A number of authors have argued that the conventional model of unemployment dynamics due to Mortensen and Pissarides has difficulty accounting for the relatively volatile behavior of labor market
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This essay provides a survey of various models that use search theory to analyze labor markets. By search theory, we mean a framework in which trading frictions are modeled explicitly. Search models
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Recently, a number of authors have argued that the standard search model cannot generate the observed business-cycle-frequency fluctuations in unemployment and job vacancies, given shocks of a
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(1. 1) Presentation Most concepts of conventional (or neo-classical) economics hold rigorously only in general equilibrium, which precludes the study of Keynesian or Marxian Economics, or a
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