Imperfect Knowledge Economics develops macroeconomic models that are open to unforeseeable structural change and avoid the presumption that market participants are irrational. This program is also developing econometric methodology that is suitable for testing time-series implications of IKE models.
Imperfect Knowledge
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Introducing the Novelty-Narrative Hypothesis
Dec 16, 2021
A new view of stock market instability under Knightian uncertainty
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Working Paper
Asset Prices Under Knightian Uncertainty
Dec 2021
A tractable formalization of the Knightian uncertainty faced by an economist and market participants in an intertemporal asset-price model.
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When Knightian Uncertainty Becomes Obvious
Oct 7, 2021
Stock-Price Volatility During the Pandemic
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Working Paper Series
Expectations Concordance and Stock Market Volatility: Knightian Uncertainty in the Year of the Pandemic
Oct 2021
Stock-Price Volatility During the Pandemic
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Why We Need the Knightian Uncertainty Hypothesis
Mar 4, 2019
INET’s President introduces a new research program that challenges orthodox assumptions about the limits of economic knowledge
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Working Paper Series
The Knightian Uncertainty Hypothesis: Unforeseeable Change and Muth’s Consistency Constraint in Modeling Aggregate Outcomes
Mar 2019
This paper introduces the Knightian Uncertainty Hypothesis (KUH), a new approach to macroeconomics and finance theory.
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How Imperfect Knowledge Shapes Financial Markets
Feb 15, 2019
Asset markets are indispensable in harnessing society’s diverse views and insights about future business performance. But those views are shaped as much by emotion and crowd mentality as by rational expectations.
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Working Paper Series
New Evidence on the Portfolio Balance Approach to Currency Returns
Feb 2019
Asset markets are indispensable in harnessing society’s diverse views and insights about future business performance. But those views are shaped as much by emotion and crowd mentality as by rational expectations.
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INET Research in a Stressful Year
Feb 23, 2018
In the face of laissez-faire capitalism at home and resurgent nationalism across the globe, INET offers an innovative look at the causes of—and solutions for—the problems that ail a fissuring world economy.
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World Economic Roundtable
DiscussionExplaining a Decade of Stagnation: Where Do We Go From Here?
Dec 14, 2017
The World Economic Roundtable seeks to help the business, investment, and policy communities understand ongoing changes in the world economy and to promote a discussion of ideas that can advance the goal of a widely shared global prosperity.
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Conference paper
Imperfect Knowledge, Unpredictability and the Failures of Modern Macroeconomics
Oct 2017
After re-iterating five well-known theorems about the properties of conditional expectations in stationary settings—such as providing unbiased minimum mean square error predictions despite in- complete information, and the law of iterated expectations—we clarify unpredictability and illustrate its prevalence empirically.
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New Developments in the Economics of Imperfect Knowledge
Oct 22, 2017 | 03:30
How we can create useful economic theory that recognizes that the future is radically uncertain?
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Conference paper
From the Prevailing Paradigm to the Qualitative Expectations Hypothesis
Oct 2017
In the paper that we present this afternoon, Soren Johansen, Anders Rahbek, Morten Tabor, and I introduce the Qualitative Expectations Hypothesis (QEH) as a new approach to modeling macroeconomic and financial outcomes.
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The Four Horsemen of the Econopocalypse
Jul 26, 2017
If standard economic theory can’t explain a traffic jam, how can it cope with crises?
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Working Paper Series
The Qualitative Expectations Hypothesis
Jun 2017
Model Ambiguity, Consistent Representations of Market Forecasts, and Sentiment