bturgut

Burak
Turgut

Burak is a PhD student at Bocconi University. He joined GRAPE team to work on macroeconomics of expectations.





W toku | Work in progress

  • The dangers of macro-prudential policy experiments: initial beliefs under adaptive learning

    The paper studies the implication of initial beliefs and associated confidence under adaptive learning. We first illustrate how prior beliefs determine learning dynamics and the evolution of endogenous variables in a small DSGE model with credit-constrained agents, in which rational expectations are replaced by constant-gain adaptive learning. We then examine how discretionary experimenting  with new macroeconomic policies is affected by expectations that agents have in relation to these policies. More specifically, we show that a newly introduced macro-prudential policy that aims at making leverage counter-cyclical can lead to substantial increase in fluctuations under learning, when the economy is hit by financial shocks, if beliefs reflect imperfect information about the policy experiment.


    We add a companion background paper on estimating financial frictions under adaptive learning.

    Jacek
    Suda
    Patrick
    Pintus
    Burak
    Turgut