Indeterminacy and the Stability Puzzle in Non-Convex Economies

dc.contributor.authorEvans, George W., 1949-
dc.contributor.authorMcGough, Bruce
dc.date.accessioned2003-08-15T20:59:39Z
dc.date.available2003-08-15T20:59:39Z
dc.date.issued2002-07-25
dc.description.abstractWe extend common factor analysis to a multi-dimensional setting by considering a bivariate reduced form consistent with many Real Business Cycle type models. We show how to obtain new representations of sunspots and find that there are parameter regions in which these sunspots are stable under learning. However, once the parameters are restricted to coincide with those generated by certain standard models of indeterminacy, we find, under one information assumption, that no stable sunspots exist, and under another information assumption, that they exist only for a very small part of the indeterminacy region. This leads to the following puzzle: why does indeterminacy almost always imply instability in RBC-type models?en
dc.format.extent670720 bytes
dc.format.mimetypeapplication/pdf
dc.identifier.urihttps://hdl.handle.net/1794/98
dc.language.isoen_US
dc.publisherUniversity of Oregon, Dept. of Economicsen
dc.relation.ispartofseriesUniversity of Oregon Economics Department Working Papers;2002-14
dc.subjectStabilityen
dc.subjectEarningsen
dc.subjectExpectationsen
dc.subjectSunspotsen
dc.subjectBusiness cyclesen
dc.subjectMacroeconomicsen
dc.subjectMicroeconomicsen
dc.subjectEconomic stabilization
dc.titleIndeterminacy and the Stability Puzzle in Non-Convex Economiesen
dc.typeWorking Paperen

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