Solving non-linear stochastic models by parameterizing expectations: An application to asset pricing with production

A new algorithm called the parameterized expectations approach(PEA) for solving dynamic stochastic models under rational expectationsis developed and its advantages and disadvantages are discussed. Thisalgorithm can, in principle, approximate the true equilibrium arbitrarilywell. Also, this algorithm works from the Euler equations, so that theequilibrium does not have to be cast in the form of a planner's problem.Monte--Carlo integration and the absence of grids on the state variables,cause the computation costs not to go up exponentially when the numberof state variables or the exogenous shocks in the economy increase. \\As an application we analyze an asset pricing model with endogenousproduction. We analyze its implications for time dependence of volatilityof stock returns and the term structure of interest rates. We argue thatthis model can generate hump--shaped term structures.

The Effect of Teacher Expectations on Student Achievement: Does The Pygmalion Effect Hold True for Cape Verde?

The present study is about the relationship between teacher expectations and student achievement. Do teachers have the power to influence student achievement? This is the question at hand. Are students under the influence of their teachers in regards to how they perceive themselves as achievers and ultimately how well they perform? What are the other factors that come into play when assessing student’s academic achievement? In light of the literature written on this topic, the two most prevalent theories are (1) Pygmalion in the Class and (2) The Sustaining Effect. These theories show a direct and determinant relationship between teacher expectations and student achievement. The main objective of this study was to investigate if in Cape Verde, teachers follow the same trend. Responses to teacher and student surveys carried out at Domingos Ramos High School gave revealing insights into how Capeverdean teachers view their students and the role the teachers themselves play in supporting the studen’s academic performance. Is the teacher’s expectation of their students the last word? In general, teachers do have a powerful influence on their students for good or for bad, but the key questions are: (1) are they aware of this power and (2) how well do they manage it? This paper includes an in-depth discussion on the different factors that influence student achievement and research carried out at an urban secondary school which characterizes how teachers and students view their roles in the student’s academic success. Recommendations are also provided to assist teachers in managing their expectations to maximize their role as a positive contributor to the success of their students.

Staying With the Tension: “Estranged Intimacy” and Gendered Expectations in the Field

The position of the anthropologist in the field is discussed, in this article, as a position of “estranged intimacy”, that is to say, the anthropologist occupies an ambiguous position of becoming intimately involved whilst concurrently standing back. This definition derives from reflections upon fieldwork, conducted in the north of Portugal, with Cape Verdean migrant young women and their experiences as mothers. The article discusses two aspects related to the fieldwork. Firstly, the way in which diverse strategies of establishing relations in the field placed me in a position of “estranged intimacy” which reconfigured the meanings I had initially attributed to the term “Cape Verdean women”. Secondly, how becoming unexpectedly involved in a situation of intense conjugal conflict led me to reconsider my understanding of Cape Verdean gender relations. Both cases demonstrate how the endeavour to produce analytical and ethnographical knowledge was shot through with an unstable mix of detachment and involvement and how coming up against the unexpected may contribute towards the reconfiguration of ethnographic knowledge, in this specific case, with regard to the dynamics of gender relations.

Dynamic higher order expectations

In models where privately informed agents interact, agents may need to formhigher order expectations, i.e. expectations of other agents' expectations. This paper develops a tractable framework for solving and analyzing linear dynamic rational expectationsmodels in which privately informed agents form higher order expectations. The frameworkis used to demonstrate that the well-known problem of the infinite regress of expectationsidentified by Townsend (1983) can be approximated to an arbitrary accuracy with a finitedimensional representation under quite general conditions. The paper is constructive andpresents a fixed point algorithm for finding an accurate solution and provides weak conditions that ensure that a fixed point exists. To help intuition, Singleton's (1987) asset pricingmodel with disparately informed traders is used as a vehicle for the paper.

Inflationary expectations during Germany's great slump

Was the German slump inevitable? This paper argues that -despite thespeed and depth of Germany's deflation in the early 1930s - fear ofinflation is evident in the bond, foreign exchange, and commodity marketsat certain critical junctures of the Great Depression. Therefore, policyoptions were more limited than many subsequent critics of Brüning'spolicies have been prepared to admit. Using a rational expectationsframework, we find strong evidence from the bondmarket to suggest fearof inflation. Futures prices also reveal that market participants werebetting on price increases. These findings are discussed in the contextof reparations and related to the need for a regime shift to overcomethe crisis.

Do expectations matter? The Great Moderation revisited

We examine the role of expectations in the Great Moderation episode. We derive theoretical restrictions in a New-Keynesian model and test them using measures of expectations obtained from survey data, the Greenbook and bond markets. Expectations explain the dynamics of inflation and of interest rates but their importance is roughly unchanged over time. Systems with and without expectations display similar reduced form characteristics. Including or excluding expectations hardly changes the economic explanation of the Great Moderation. Results are robust to changes in the structure of the empirical model.

Constraints and non-existence of rational expectations equilibria

In this article we show that in the presence of trading constraints, such as short sale constraints, the standard definition of a Rational Expectations Equilibrium allows for equilibrium prices that reveal information unknown to any active trader in the market. We propose a new definition of the Rational Expectations Equilibrium that incorporates a stronger measurability condition than measurability with respect to the join of the information sets of the agents and give an example of non-existence of equilibrium. The example is robust to perturbations on the data of the economy and the introduction of new assets.

Patient, primary care physician and specialist expectations of primary care physician involvement in cancer care.

BACKGROUND: In Canada, many health authorities recommend that primary care physicians (PCP) stay involved throughout their patients' cancer journey to increase continuity of care. Few studies have focused on patient and physician expectations regarding PCP involvement in cancer care. OBJECTIVE: To compare lung cancer patient, PCP and specialist expectations regarding PCP involvement in coordination of care, emotional support, information transmission and symptom relief at the different phases of cancer. DESIGN: Canadian survey of lung cancer patients, PCPs and cancer specialists PARTICIPANTS: A total of 395 patients completed questionnaires on their expectations regarding their PCP participation in several aspects of care, at different phases of their cancer. Also, 45 specialists and 232 community-based PCP involved in these patients' care responded to a mail survey on the same aspects of cancer care. RESULTS: Most specialists did not expect participation of the PCP in coordination of care in the diagnosis and treatment phases (65% and 78% respectively), in contrast with patients (83% and 85%) and PCPs (80% and 59%) (p < 0.0001). At these same phases, the best agreement among the 3 groups was around PCP role in emotional support: 84% and more of all groups had this expectation. PCP participation in symptom relief was another shared expectation, but more unanimously at the treatment phase (p = 0.85). In the advanced phase, most specialists expect a major role of PCP in all aspects of care (from 81% to 97%). Patients and PCP agree with them mainly for emotional support and information transmission. CONCLUSION: Lung cancer patient, PCP and specialist expectations regarding PCP role differ with the phase of cancer and the specific aspect of cancer care. There is a need to reach a better agreement among them and to better define PCP role, in order to achieve more collaborative and integrated cancer care.

Patient expectations at a multicultural out-patient clinic in Switzerland.

BACKGROUND: Recognizing patient expectation is considered as an important objective for primary care physicians. A number of studies suggest that failure to identify patient expectations can lead to patient dissatisfaction with care, lack of compliance and inappropriate use of medical resources. It has been suggested that identifying patient expectations in multicultural contexts can be especially challenging. OBJECTIVES: The aim of the study was to compare health care expectations of Swiss and immigrant patients attending the out-patient clinic of a Swiss university hospital and to assess physicians' ability to identify their patients' expectations. METHODS: Over a 3-month period, all patients attending the out-patient clinic at a Swiss university hospital were requested to complete pre-consultation surveys. Their physicians were requested to complete post-consultation surveys. Outcome measures were patients' self-rated health, resort to prior home treatment, patients' expectations of the consultation, physicians' perception of their patients' expectations and agreement between patients and physicians. RESULTS: We analysed 343 questionnaires completed by patients prior to their consultation (> 50% immigrants) and 333 questionnaires completed by their physicians after the consultation. Most expectations were shared by all patients. Physicians had inaccurate perceptions of their patients' expectations, regardless of patients' origin. CONCLUSIONS: Our study found no evidence that immigrant patients' expectations differed from those of Swiss patients, nor that physicians had more difficulty identifying expectations of immigrant patients. However, physicians in our study were generally poor at identifying patients' expectations, and therefore inter-group differences may be difficult to detect. Our results point to the need to strengthen physicians' general communication skills which should then serve as a foundation for more specific, cross-cultural communication training.

Needs, expectations, and concerns of medical students regarding end-of-life issues before the introduction of a mandatory undergraduate palliative care curriculum.

BACKGROUND: In the past, implementation of effective palliative care curricula has emerged as a priority in medical education. In order to gain insight into medical students' needs and expectations, we conducted a survey before mandatory palliative care education was introduced in our faculty. METHODS: Seven hundred nine students answered a questionnaire mainly consisting of numeric rating scales (0-10). RESULTS: Participants attributed a high importance to palliative care for their future professional life (mean, 7.51 ± 2.2). For most students, symptom control was crucial (7.72 ± 2.2). However, even higher importance was assigned to ethical and legal issues (8.16 ± 1.9). "Self-reflection regarding their own role as a physician caring for the terminally ill along with psychological support" was also regarded as highly important (7.25 ± 2.4). Most students were moderately concerned at the prospect of being confronted with suffering and death (5.13 ± 2.4). This emotional distress was rated significantly higher by female students (5.4 ± 2.4 versus 4.6 ± 2.4; p < 0.001). Seventeen percent of all students rated their distress as being 7 of 10 or higher, which indicates a considerable psychological strain in terms of dealing with end-of-life issues in the future. Professional or personal experience with terminally ill persons lowered these anxieties significantly (4.99 ± 2.34 versus 5.47 ± 2.5, p < 0.05). CONCLUSIONS: Medical students stated a remarkably high interest in learning palliative care competencies. Responding to their specific concerns and needs-especially with regard to the acquisition of emotional coping skills-may be key for the development of successful palliative care curricula.