PRICE BEHAVIOR UNDER ALTERNATIVE FORMS OF PRICE EXPECTATIONS
Abstract
The components of the variance of price are analyzed. In the models considered, a price process is assumed to be evolving through time. It is composed of fluctuations of different lengths of time. The relative importance of these fluctuations in shaping the over-all process may show how well a particular model leads to the price behavior commonly observed. This elaboration will extend the traditional synthesis by means of the theory of stationary time series, or more precisely, the spectral representation of such series. Questions to be answered are, for example: What is the relative importance of fluctuations of different lengths of time in the price process. How will reducing the production period affect price. How influential are price expectations on price. Attention is restricted to situations wherein temporary shifts in economic phenomena are dominant over permanent changes in the economic structure. This focus precludes any change in the equilibrium price and, therefore, simplicity dictates that deviation from equilibrium only be considered.
Document Details
- Document Type
- Technical Report
- Publication Date
- Apr 01, 1963
- Accession Number
- AD0403348
Entities
People
- George S. Fishman
Organizations
- RAND Corporation