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Would and should government lie about economic statistics: simulations based o evolutionary cellular automata

  • Shu-Heng Chen
Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 1285)

Abstract

Are there any possible situations in which the state of the economy tomorrow depends on that of the economy today revealed by the government? If so, does the government have any “incentives” to manipulate statistics? Using a simulation approach based on a model of evolutionary cellular automata, this paper tackles the issue by taking explicitly into account self- fulfilling expectations and the existence of multiple equilibria. We find that the government will not always lie, especially when agents use the Bayesian learning algorithm to adjust their reliance on government statistics. Nevertheless, there is an incentive for the government to lie under certain circumstances, that is, when the economy, in terms of our model, is in a cloudy zone or the scale of the pessimistic shock is moderate.

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References

  1. 1.
    Chen, S. (1996), “The Learning and Coordination of Endogenous Beliefs: A Simulation Based on the Model of Evolutionary Cellular Automata,” AI-ECON Research Group Working Paper Series 9609, Department of Economics, National Chengchi University.Google Scholar
  2. 2.
    Leeper (1991), “Consumer Attitudes and Business Cycles”, Federal Reserve Bank of Atlanta Working Paper Series, 91–11.Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 1997

Authors and Affiliations

  • Shu-Heng Chen
    • 1
  1. 1.AI-ECON Research Group Department of EconomicsNational Chengchi UniversityTaipeiTaiwan, R.O.C.

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