Adaptive Expectations Research Articles

Identification and correction of ratchet effect of residential land price: empirical study on urban agglomeration in China

ABSTRACT This paper theoretically analyses the mechanism of the ratchet effect of land finance and adaptive expectations on residential land prices and discuss the distort factors and spatial characteristics of residential land price in the Yangtze River Delta urban agglomeration (YRDUA) from 2008 to 2018. It is found that:(1) Land finance and adaptive expectations significantly drive the long-term growth of residential land prices and maintain the ratchet effect under the interaction. (2) There are significant spatial spillover benefits of residential land prices, and land finance and adaptive expectations not only drive the increase of local residential land prices but also have significant positive benefits on residential land prices in neighbouring areas. (3) Land price distortion is significant in municipalities directly under the central government and provincial capitals. However, residential land prices in cities farther away from large cities are lower than their reasonable values, and the distortion correction coefficient shows a spatially graded distribution spreading from large cities to the periphery. Land finance and adaptive expectations do not make residential land prices in all cities higher than their reasonable values. The above findings have some theoretical and policy implications for optimizing land administration.

On the delayed Cournot–Theocharis oligopoly model under adaptive expectations

This paper considers the Cournot–Theocharis oligopoly model, where firms make their choices under adaptive expectations. Assuming that the information that each firm has about the outputs of the rest of the competitors in the market is obtained with a time delay, we analyze its impact on the stability of the equilibrium point (Cournot point) of the model. We prove that when the time delay is smaller than four, the region of stability decreases as the time delay increases. We explore the same question for time delays greater than four and conjecture a similar behavior as the one for time delays greater or equal to four. So, the better the information, the more stable the system.

Microeconomic analysis of the main ways of decomposition of the cost index

The article considers a microeconomic analysis of the main options for decomposing the value index into price and quantity change factors, as a result of which it becomes possible to interpret these options in terms of changing the expectations of either the consumer or the producer. The purpose of the study is to show that the Laspeyres, Paasche and Fisher indices have not only an estimated, but also an important content function, reflecting changes in the market expectations of economic agents. To achieve the goal, a comparative analysis of the basic formulas of the concepts of adaptive and rational expectations was carried out, as well as a meaningful analysis of the cost aggregates that are components of the Laspeyres, Paasche and Fisher indices, and a schematic diagram of the formation of adaptive and rational expectations was developed. As a methodological basis for solving the problem, the expectation theory, the analogy method, the index method of factor reversibility, and the minimum basis method were used. It is shown that Laspeyres indices are the essence of changes in adaptive expectations, Paasche indices are changes in rational expectations of producers and consumers, and Fisher indices are a joint change in adaptive and rational expectations of economic agents. It is advisable to interpret one of the main methods of decomposition of the cost index into factors as a “buying” method that meets the expectations of the consumer, another — as a “selling” method that meets the expectations of the manufacturer, a decomposition method, the third — as a “compromise” between market expectations of economic agents.

Debt stabilisation and dynamic interaction between monetary and fiscal policy: In medio stat virtus

Recent literature has focused on studying how fiscal and monetary authorities in a monetary union can interact during a debt stabilisation process. This literature shows that only exogenous shocks or differences among countries determine deviations from the target level of macroeconomic variables in the steady state equilibrium. This paper aims to reformulate such modelling in a time setting, assuming that policy authorities do not coordinate and cannot perfectly predict the decisions made by their counterpart. This paper shows that simple decision processes driven by the best response mechanism or adaptive expectations do not guarantee convergence to steady-state equilibrium. Instead, persistent fluctuations in the level of macroeconomic variables and policy instruments may emerge if the relative weight given by the fiscal authority to the components of its objective function, namely, debt stability and output stability, is too unbalanced.

Structural Stability Analysis in a Dynamic IS-LM-AS Macroeconomic Model with Inflation Expectations

In this article, we carry out the structural analysis of an IS-LM-AS macroeconomic model with adaptive inflation expectations, exploring the presence of a possible local bifurcation. We prove that the model is structurally unstable when the speed with which economic agents adjust their expectations about future inflation is equal to the inverse of the semi-elasticity of real money demand with respect to the nominal interest rate since the periodic solutions are lost when the adaptive expectations parameter suffer any small change, ceteris paribus. Additionally, the phase portraits of the instantaneous rate of change of the real interest rate, the inflation rate, and the instantaneous rate of change of the inflation rate are numerically simulated in ℝ 3 with MATLAB for three asymptotically and locally stable cases and for the degenerate Hopf bifurcation. Finally, our results show that, specifically, in the case of pure conjugate complex eigenvalues, the economy could enter periods of an inflationary/deflationary spiral when the adaptive expectations parameter is of greater magnitude to the inverse of the semi-elasticity of real money demand balances with respect to the nominal interest rate, regardless of its initial state.

Nonlinear dynamics of a heterogeneous quantum Commons’ tragedy

This paper first builds a nonlinear dynamic system of the Commons’ tragedy with quantum strategies in discrete time. There are two heterogeneous expectations in the game, namely, one of the two players is boundedly rational and the other is of adaptive expectation. Secondly, we obtain a sufficient and necessary condition for quantum Nash equilibria to be stable equilibria. Finally, we investigate the impacts of quantum entanglement on the stable region of systems and analyze the behaviors of complex dynamical systems. The results show that quantum Nash equilibria are stable points of nonlinear dynamics for quantum Commons’ tragedy if both quantum entanglement and quantum strategy adjustment speed satisfy certain conditions. In addition, numerical simulations discuss the features of nonlinear dynamics, such as bifurcation, the largest Lyapunov exponent, fractal dimension, strange attractor, and sensitivity to initial conditions. The numerical results show that nonlinear dynamics appear chaotic if the adjustment speed of quantum strategy or the quantum entanglement degree is larger.

The Roots of Great Power Competition: An Analysis Based on the Increasing Returns Mechanism

Geopolitics, technology and international institutions are three major areas of great power competition. In the analysis of great power relations, both the balance of power theory and the hegemony theory rely on the assumption of diminishing returns and ignore the possibility of increasing returns. Increasing returns play an extensive role in geographical location, technological evolution and institutional change; accordingly, the increasing returns mechanism in great power relations is reflected in the geopolitical competition, technological competition and international institutional competition of great powers. The rational expectation that initial advantages will be transformed into long-term advantages through the mechanism of increasing returns drives great powers into competition whether they are rivals or allies. As specific mechanisms leading to increasing returns, coordination effects operate in geopolitical competition, technological competition and international institution competition; learning effects are found in technological competition and international institution competition; and adaptive expectations play a part in international institution competition. Various cases, ranging from the Anglo-Dutch rivalry over maritime hegemony in the 17th century to the current US-European competition over international investment arbitration regimes, show that great power competition derives from the logic of increasing returns.

Time- and temperature-dependent dynamics of prothoracicotropic hormone and ecdysone sensitivity co-regulate pupal diapause in the green-veined white butterfly Pieris napi

Diapause, a general shutdown of developmental pathways, is a vital adaptation allowing insects to adjust their life cycle to adverse environmental conditions such as winter. Diapause in the pupal stage is regulated by the major developmental hormones prothoracicotropic hormone (PTTH) and ecdysone. Termination of pupal diapause in the butterfly Pieris napi depends on low temperatures; therefore, we study the temperature-dependence of PTTH secretion and ecdysone sensitivity dynamics throughout diapause, with a focus on diapause termination. While PTTH is present throughout diapause in the cell bodies of two pairs of neurosecretory cells in the brain, it is absent in the axons, and the PTTH concentration in the haemolymph is significantly lower during diapause than during post diapause development, indicating that the PTTH signaling is reduced during diapause. The sensitivity of pupae to ecdysone injections is dependent on diapause stage. While pupae are sensitive to ecdysone during early diapause initiation, they gradually lose this sensitivity and become insensitive to non-lethal concentrations of ecdysone about 30 days into diapause. At low temperatures, reflecting natural overwintering conditions, diapause termination propensity after ecdysone injection is precocious compared to controls. In stark contrast, at high temperatures reflecting late summer and early autumn conditions, sensitivity to ecdysone does not return. Thus, here we show that PTTH secretion is reduced during diapause, and additionally, that the low ecdysone sensitivity of early diapause maintenance is lost during termination in a temperature dependent manner. The link between ecdysone sensitivity and low-temperature dependence reveals a putative mechanism of how diapause termination operates in insects that is in line with adaptive expectations for diapause.

Investigating the Impact of Economic Sanctions on Inflation in Iran (Fuzzy Approach)

Iran's economy has been facing the problem of inflation for more than half a century. According to empirical studies, various visible and invisible political, economic, cultural, etc. factors have been effective in increasing the inflation rate; Factors that sometimes cannot all be considered in one economic model. Therefore, it is not possible to comment with certainty on the extent to which some factors affect the inflation rate with conventional methods. Based on this argument, in order to use an appropriate method in this study, from the fuzzy approach to investigate the severity of the impact of economic sanctions imposed on Iran along with other variables affecting inflation, in the period after the Islamic Revolution (1978-2020), Used. The results show that severe economic sanctions against Iran with a strong fuzzy coefficient, have a positive and significant effect on inflation in Iran. Also, liquidity, people's adaptive expectations, budget deficit and exchange rate fluctuations, respectively, after the severe sanctions, have had the greatest impact on increasing inflation. The obtained fuzzy coefficients of oil revenues and economic growth (excluding oil) indicate the negative effect of these two variables on the inflation rate in Iran.

The Associations Between Illness Perceptions and Expectations About Return to Work of Workers With Chronic Diseases and Their Significant Others: A Dyadic Analysis

Purpose To examine the associations between illness perceptions and expectations about full return to work (RTW) of workers with chronic diseases and their significant others. Methods This study used cross-sectional data of 94 dyads consisting of workers with chronic diseases and their significant others. We performed dyadic analyses based on the Actor-Partner Interdependence Model (APIM), estimating associations of illness perceptions of the two members of the dyad with their own expectations about the worker’s full RTW within six months (actor effect) as well as with the other dyad member’s expectations about the worker’s RTW (partner effect). Results Illness perceptions of one dyad member were significantly associated with his or her own RTW expectations (actor effect composite illness perceptions score; B = −0.05, p < .001; rd = .37) and with the other dyad member’s RTW expectations (partner effect composite illness perceptions score; B = −0.04, p < .001; rd = .35). That is, more negative illness perceptions of one member of the dyad were associated with more negative RTW expectations in both dyad members. For most illness perception domains, we found small to moderate actor and partner effects on RTW expectations (rd range: .23–.44). Conclusions This study suggests that illness perceptions and RTW expectations should be considered at a dyadic level as workers and their significant others influence each other’s beliefs. When trying to facilitate adaptive illness perceptions and RTW expectations, involving significant others may be more effective than an individualistic approach targeted at the worker only.

Income expectations during the lockdown: evidence from a student survey

ABSTRACT We investigate the effect of the COVID-19 pandemic on students’ perception of future economic conditions. Our results show that students’ perception of the current situation is a strong predictor of future expectations. Moreover, students whose parents are self-employed seem to be more concerned about the future. We also detect that an increase in anxiety due to the pandemic and lockdown leads to negative expectations. We find that students seem to anticipate the long run effects of the pandemic by having increasingly pessimistic expectations about the future. This appears to be in line with both rational expectation theory, in which they consider the current situation as a signal for long-run decrease of future expectations, and at the same time, with adaptive expectation schemes anchored by their knowledge on historical pandemic situations.

The relationship between the short-term and long-term Phillips curve for the Czech Republic

Inflation in Czech Republic in 2021 significantly deviated from the tolerance band. Although the economic results are lagging behind expectations, inflationary pressures, mainly from abroad, are still intensifying. At the same time, the rapid rise in consumer prices affects not only households and consumers, but also business and companies. As is known, a very important tool for understanding inflation is the Phillips curve, which shows the relationship between two variables, the first one is inflation and the second one is unemployment. The aim of this paper is to research the relationship between the short-term Philips curves and long-term Phillips curves for the Czech Republic. For this purpose, data on the inflation rate and unemployment rate between 1993 and 2018 were contrasted based on data published by the Czech Statistical Office. The short-term Phillips curve was assumed under adaptive expectation conditions, whereby a regression analysis was undertaken using SPSS statistical software to determine suitable values for the corresponding parameters. In addition, and in accordance with the trend figure and data description figure for both the unemployment rate variable and inflation rate variable, the basis for the development of the long-term Phillips curve is described. Subsequently, it is concluded that a mutually substitutive relationship exists with regards to the short-term and that the long-term is an irregular circular curve that moves in a clockwise direction.

The many faces of the taylor rule for advanced undergraduate macroeconomics

The Taylor Rule and Fisher Relation can be represented on a graph that allows for discussion of the zero lower bound on interest rates, the existence of multiple equilibria, secular stagnation and Japan’s lost decade, among other issues. The Taylor Rule and Fisher Relation can also be included in a small macroeconomic model that can be used to study the stability under various interest rate rules under adaptive expectations or solved under rational expectations. There are a number of related empirical exercises using both descriptive statistics and regressions for undergraduates with intermediate macro level knowledge.

A volatility model based on adaptive expectations: An improvement on the rational expectations model

Investment expectations affect stock price volatility, making asset pricing more difficult. Correctly capturing investment expectations can help alleviate this problem. In this paper, we analyze the rational expectations properties of existing volatility models. Second, we explore a volatility model based on adaptive expectations by using mathematical methods and the applicable conditions and continuity feature of the adaptive expectations volatility model. Third, under the assumption of adaptive expectations, we construct adaptive expectations GARCH (ADGARCH) and LSTM-ADGARCH models. Using daily trading data from the Shanghai stock index and SPX500 for the period 2015–2021, we find that the volatility model based on adaptive expectations has more explanatory power than one based on rational expectations.

Path dependence and breach of Vocational Education internationalization in The Belt and Road Initiative background

" The Belt and Road Initiative " strategy requires occupation education to further improve its international level and international competitiveness and cultivate more international talents. Since the reform and opening up, China's vocational education has formed a unique system, but there are multiple imbalances and path locking in the process of internationalization. Based on the path dependence theory, this paper analyzes its root causes: the retention of scale effect, the restriction of coordination effect, the restriction of adaptive expectation, the restriction of increasing returns, the obstruction of vested interests, the bondage of traditional ideas and so on. In order to realize the path transcendence of the internationalization of vocational education, we should constantly improve the internationalization support system, innovate the internationalization development mode and improve the internationalization co construction mechanism. The Belt and Road Initiative and one occupation, will be promoted.

The Fellow Traveller: A Machine Learning Approach to Travel Management

Abstract: Even after the presence of multiple services which helps us in travelling like Uber, Ola, Make My Trip, Goibibo etc, the travelling enthusiasts or peoples who are going on vacation don’t have proper platform where they can plan their entire trip at one place. There are so many places where only local rental services is available means no online cab services, no platform to contact a guide, platform to book self-driving vehicles, to check the current and predicted weather conditions of the destination, proper expense splitter if travelling in group and a platform which can predict the proper ways through which you can travel to the destination in a set budget. These problems demands an application which helps to manage all the travelling requirements like rental vehicles, hotels, activities, budget manager, expense splitter if travelling in group etc. Also to provide direct contacts of local drivers, help centres, emergencies etc. An application which can use machine learnings prediction system like Support Vector Regression Model and Adaptive Neuro Fuzzy Inference Systems, Expectation Maximization and Self-Organizing Map for clustering techniques and for dimensionality reduction, Principal Component Analysis.It will be really helpful to all the travel enthusiasts as well as this platform can also provide broader scope to the local vendors and peoples of the entered destination as it will directly connect the travellers to them, and it can recommend best services to ease the travel. It will also provide air pollution report and alternative tour plan. Index Terms: Travel Management, Prediction, Recommendation, Machine Learning, Alternate Planning

Returning home: The role of expectations in re-entry adaptation.

Returning home after a study abroad experience can be challenging. In the current research, we examine the discrepancy between adaptation expectations and experience in a longitudinal sojourner study (N = 1319; M age = 17 years; 70% female). Returnees adaptation expectations were assessed prior to returning home, followed by post return measures of adaptation experiences and general well‐being. Overall, returnees reported higher levels of re‐entry adaptation than anticipated. According to the accuracy hypothesis, unmet expectations will be associated with lower well‐being. In contrast, the directional hypothesis suggests that unmet expectations will negatively impact on well‐being, but only if the expectation is undermet. Well‐being on return was regressed on pre‐travel adaptation expectations and adaptation experience on re‐entry. Polynomial regression and Response Surface Analyses were conducted for two outcome variables (stress and satisfaction with life), two types of adaptation (psychological and sociocultural), and at different time points (approximately 2 weeks and 6 months after return). Results consistently show that larger discrepancies were associated with lower well‐being for negative mismatches (when expectations were undermet). For positive mismatches, if adaptation was better than expected, well‐being was higher. Congruence between expectation and experience were not associated with well‐being. Thus, across analyses, results supported a directional hypothesis.

주택가격요인 분석에 대한 연구

The volatility of the housing price based on demand and supply in the housing market reflects the structural features of the housing market. Consequently, decomposing the housing market into trends and cycles through econometric models will make it possible to deduce the nature of the housing market in the long term, in addition to provide hindsight for real estate portfolio asset allocation in a more systematic way.BRBR The paper addresses the housing price behavior through univariate time series analysis. The Unobserved-Component (UC) model and the Beveridge-Nelson (BN) decomposition model are applied to analyze the factors for the volatility of housing price with the trends and cycles. Specifically, the UC model is analyzed by UC-Zero(0) model assuming the covariance between the trends and the cycles, which are unobserved variables, is zero (0), and the UC-UR (UC-UnRestricted) model, which is free from the restraint of the covariance between the trends and cycles. The estimation is based on the Kalman Filter. The study analyzes how the volatility in the domestic housing price index was influenced by the trends and cycles, which are inherent variables, by comparing the estimated values of the UC-0 and UC-UR model with the BN decomposition model. Domestic housing prices have plunged two times: the 1997 Asian financial crisis and the 2008 Global financial crisis. However, the analysis data in this research include only the 2008 Global financial crisis.BRBR The results are summarized as follows: First, the volatility of the domestic housing price index can be explained by the UC-0 model. As explained by the UC-0 model with the assumption of the covariance between trend and cycles zero(0), the domestic housing price index has not shown any correlation between the trend and cycle, and thus it implies that the trends mainly explain the volatility in the housing price index. Second, as the trends mainly explain the volatility in housing prices, domestic housing prices do not follow a random walk under the efficient market hypothesis. Hence, the price volatility can be seen as predictable, and the right-upward price trend that has been lasted for a considerable period of time can be seen as a result of reflecting adaptive expectations of market participants. Lastly, institutional investors such as pension funds are increasing their share of real estate and alternative investments, and the share of real estate is increasing in the asset market. The fact that inefficient housing market, and the housing price return as seen through the housing price analysis follow a very differential distribution from the normal distribution would mean that as a factor hindering investors

Pricing Process in Mexico: New Evidence on the Inflation Dynamics

We analyze the inflation dynamics in Mexico during inflation targeting period by a GMM estimate of the Hybrid New Keynesian Phillips Curve in its open and closed economy versions. We update and discuss previous results and expand the capacity of this tool to analyze inflationary dynamics by incorporating the exchange rate on labor costs. We find: a) robust evidence of adaptive and rational expectations; b) incorporating the exchange rate improves the inflation fit; c) this version of the Phillips Curve has strengthened since Great Recession, and e) expectations formation process changes during inflationary episodes according to the origin of shocks.

Decomposing the output gap with inflation learning

We incorporate adaptive learning-based inflation expectations in an Unobserved Components model in order to study the link between inflation and the output gap. A modification of the hybrid New Keynesian Phillips curve serves as the backbone for modeling inflation dynamics. The resulting output gap from our model has a lower amplitude than gaps obtained using proxy measures of expectations and other commonly used measures of the cycle. This result is robust across different subsamples as well as for alternative measures of inflation, nor is it driven by a breakdown in the Phillips curve. In fact, we find evidence in favor of a relatively flat but significant Phillips curve relationship. In addition, we find that learning based inflation forecasts not only shadow survey expectations in the pre-Volcker era, they also track inflation closely during the financial crisis and do not exhibit persistent overshooting. Furthermore, our results indicate that several recessions, including the Great Recession, were at least partially driven by large drops in the trend component of output.