The E-Correspondence Principle
AbstractWe present a new application of Samuelson's Correspondence Principle to the analysis of comparative dynamics in stochastic rational expectations models. Our version, which we call the E-correspondence principle, applies to rational expectations equilibria that are stable under least squares and closely related learning rules. With this technique it is sometimes possible to study, without explicitly solving for the equilibrium, how qualitative properties of the equilibrium are affected by changes in the model parameters. Applications to overlapping generations and New Keynesian models illustrate the potential of the technique. Copyright (c) The London School of Economics and Political Science 2006.
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Bibliographic InfoArticle provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 74 (2007)
Issue (Month): 293 (02)
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Other versions of this item:
- George W. Evans & Seppo Honkapohja, 2004. "The E-Correspondence Principle," CESifo Working Paper Series 1112, CESifo Group Munich.
- George W. Evans & Seppo Honkapohja, 2003. "The E-correspondence Principle," University of Oregon Economics Department Working Papers 2003-27, University of Oregon Economics Department, revised 10 Jun 2005.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Evans, George W. & Honkapohja, Seppo, 2003.
"Existence of adaptively stable sunspot equilibria near an indeterminate steady state,"
Journal of Economic Theory,
Elsevier, vol. 111(1), pages 125-134, July.
- George W. Evans & Seppo Honkapohja, 2002. "Existence of Adaptively Stable Sunspot Equilibria near an Indeterminate Steady State," University of Oregon Economics Department Working Papers 2002-9, University of Oregon Economics Department, revised 06 Apr 2002.
- George W. Evans & Seppo Honkapohja, 2001. "Existence of Adaptively Stable Sunspot Equilibria Near an Indeterminate Steady State," CESifo Working Paper Series 478, CESifo Group Munich.
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