Expectations have variable impact, finds ECB paper
Effect of expectations appears to vary over time, researchers say
Changes in expectations have an impact on the real economy, but that impact varies with time, according to research published today by the European Central Bank (ECB).
The working paper, Expectation-driven cycles: time-varying effects, by Antonello D'Agostino and Caterina Mendicino, examines the response of unemployment to changes in expectations. The authors find a "remarkably larger" effect during the 2008 financial crisis than in previous periods.
The researchers extend their vector
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