FIRMS' BANKRUPTCY AND TURNOVER IN A MACROECONOMY

The so-called “rational expectations revolution” that has completely reshaped economic theory and general equilibrium theory in the last two decades has, incidentally, brought earlier ideas on the crucial importance of agents’ knowledge, information and beliefs to the forefront forcing modem followers of those ideas to reconsider them far more deeply, systematically and rigorously (Arrow (1986), Hahn (1977, 1981)). It soon turned out that when agents act upon beliefs and engage in out-of-equilibrium learning, heterogeneity (of beliefs) and self-referentiality (of market outcomes)1 may determine large sets of multiple equilibria, and of dynamic paths of the economy, which collapse onto the unique rational-expectations (RE) competitive general equilibrium only under a number of restrictive conditions2.

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