Existence of Adaptively Stable Sunspot Equilibria near an Indeterminate Steady State

Show full item record

Title: Existence of Adaptively Stable Sunspot Equilibria near an Indeterminate Steady State
Author: Evans, George W., 1949-; Honkapohja, Seppo, 1951-
Abstract: We examine the nonlinear model x_t = E_t F(x_(t+1)). Markov SSEs exist near an indeterminate steady state, hat(x)=F(hat(x)), provided |F'(hat(x)| > 1. Despite the importance of indeterminancy in macroeconomics, earlier results have not provided conditions for the existance of adaptively stable SSEs near an indeterminate steady state. We show that there exists Markov SSEs near hat(x) that are E-stable, and therefore locally stable under adaptive learning, if F'(hat(x)) < -1.
URI: http://hdl.handle.net/1794/93
Date: 2002-04-06


Files in this item

Files Size Format View
2002-09.pdf 232Kb PDF View/Open

This item appears in the following Collection(s)

Show full item record