Evans, George W., 1949-McGough, Bruce2006-11-212006-11-212006-10-09https://hdl.handle.net/1794/363245 p. Revision of: Stable noisy K-state Markov Sunspots.We consider a linear univariate rational expectations model, with a predetermined variable, and study existence and stability of solutions driven by an extraneous finite-state Markov process. We show that when the model is indeterminate there exists a new class of kstate dependent sunspot equilibria in addition to the k-state sunspot equilibria (k-SSEs) already known to exist in part of the indeterminacy region. The new type of equilibria, which we call ergodic k-SSEs, are driven by a finite-state sunspot but can have an infinite range of values even in the nonstochastic model. Stability under econometric learning is analyzed using representations that nest both types of equilibria. 2-SSEs and ergodic 2-SSEs are learnable for parameters in proper subsets of the regions of their existence. Our results extend to models with intrinsic random shocks.761525 bytesapplication/pdfen-USMarkov sunspotsLearningIndeterminacyExpectational stabilityWorking Paper