Hi, my name is Gaetano, I am a macroeconomist with research interests in informational frictions, rational inattention, adaptive and eductive learning in the context of DSGE models. Here you can find some works of mine, any comment is welcome.
 

- Endogenous Signals and Multiplicity*

This paper demonstrates how small enough private uncertainty on an aggregate endogenous state of the economy can generate three determinate rational expectation equilibria, whereas a unique equilibrium exists otherwise. The main result is embedded in a fully microfounded macroeconomic model where agents learn from arising prices. The findings apply to a broad class of static signal extraction problems where both fundamental correlation and pay-off externalities jointly contribute to a multiplicity of equilibria. I also show how a multiplicity can arise with common knowledge of fundamentals because of pay-off externalities only. In such a case two sunspot-like equilibria emerge (beyond a fundamental one) where prices moves with non-fundamental noise. 

* Part of the results presented in this paper have circulated in an earlier paper under the title of "Rational Exuberance".

- Eductive foundations of E-stability

This paper presents cross-sectional (CS) eductive learning. I consider the case of agents that rationalize whether or not others can hold a different expectation from their own, rather than which one is the aggregate market outcome. This model of eductive learning, in contrast to the classical one, predicts agents' beliefs always converge to the unique rational expectation equilibrium of the benchmark Cobweb model. In particular, CS-eductive learning yields the same convergence conditions of E-stability and corresponds to a refinement of the rationalizable set.

- Good Luck or Good Policy? An Expectational Theory of Macro-Volatility Switches

In an otherwise unique-equilibrium model, agents are segmented into a few informational islands according to the signal they receive about others' expectations. Even if agents perfectly observe fundamentals, rational-exuberance equilibria (REX) can arise as they put weight on expectational signals to refine their forecasts. Constant-gain adaptive learning can trigger jumps between the equilibrium where only fundamentals are weighted and a REX. This determines regime switching in aggregate volatility despite unchanged monetary policy and time-invariant distribution of exogenous shocks. In this context, a thigh inflation-targeting policy can lower expectational complementarity preventing rational exuberance, although its effect is non-monotone.

- Market Power, Expectational Instability and Welfare in Cobweb Economies

This paper extends eductive learning in the context of Cobweb economies with a finite number of suppliers. I show that eductive convergence requirements involve restrictions on the number of active firms in addition to usual conditions on relative slope of demand and supply curves. This implies that eductively unstable markets can achieve expectational coordination through an increase of supply costs or through a reduction in the number of active firms. In such a case, welfare losses due to the arising of market power are lower than the welfare losses due to the increase of supply costs.

- On Revealed Diversity**

We introduce and characterize axiomatically a diversity criterion, capturing individual dissimilarity as `revealed' by the different best-choices that members of a society select from a set of opportunities. Diversity ordering is induced by a class of frequency-based evaluation functions, the one element of which is the celebrated diversity measure, Shannon entropy.

** With E. Savaglio