Behavioral economics
Maryam Shahlaee; Mehdi Pedram; Narges Hajimoladarvish
Abstract
Acquiring information about expectations is difficult as individuals' beliefs are unobservable. Thus, how expectation forms and how to model expectation is an open question in economic modelling that has been addressed recently by experimental economics. In this article, in order to identify expectations, ...
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Acquiring information about expectations is difficult as individuals' beliefs are unobservable. Thus, how expectation forms and how to model expectation is an open question in economic modelling that has been addressed recently by experimental economics. In this article, in order to identify expectations, we examine the behaviour of subjects when encountering new exchange rates in an experiment. Furthermore, in this experiment, differences of expectation formation among participants and their relation to cognitive abilities are analysed. To motivate people, incentive payments are used. In our setting, while the rational expectation hypothesis is not supported, the adaptive expectation is not rejected. Agents form their expectations in the same way regardless of their cognitive ability. In this context, individuals overreact to the new quantity of exchange rate which is assumed as a noisy perception. This finding is considered as evidence of emotional behaviours in the exchange market.
Zahra Azizi; Mehdi Pedram; pegah Azizi
Abstract
In recent years, extensive studies have been done on how trade openness affects economic growth; however, a limited number of studies focus on the volatility of economic growth. A group of these studies have identified openness as a factor in achieving more stable economic growth, and also a group of ...
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In recent years, extensive studies have been done on how trade openness affects economic growth; however, a limited number of studies focus on the volatility of economic growth. A group of these studies have identified openness as a factor in achieving more stable economic growth, and also a group of researches have considered it as a factor in creating instability in the economy, therefore, the empirical studies have ambiguous. An important reason for this ambiguity, can be the structure of trade and exports of countries. The export concentration will lead to a disruption of a large part of the country's production and foreign revenues, when there is an export shock. Therefore, in this article, in addition to studying the effect of trade openness on economic growth volatility, the role of export diversification in this connection is examined. To this end, data from the 18 selected developing countries have been used during the years 1980- 2015 in two panel data models. The first model, regardless of the diversification of exports, estimates this relationship, and the second model, enters the export diversification by multiplying it by openness. The results of the research indicate that the greater degree of trade openness, due to the transfer of external shocks to the economy, increases economic growth instability, but the diversification of exports can help to reduce the volatility of economic growth caused by trade.
