Representations And Sunspot Stability
AbstractBy endowing his agents with simple forecasting models, or representations, Woodford (1990) found that finite state Markov sunspot equilibria may be stable under learning. We show that common factor representations generalize to all sunspot equilibria the representations used by Woodford (1990). We find that if finite state Markov sunspots are stable under learning then all sunspots are stable under learning, provided common factor representations are used.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Macroeconomic Dynamics.
Volume (Year): 15 (2011)
Issue (Month): 01 (February)
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Other versions of this item:
- George W. Evans & Bruce McGough, 2007. "Representations and Sunspot Stability," University of Oregon Economics Department Working Papers 2007-1, University of Oregon Economics Department, revised 28 Aug 2008.
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
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- Gaballo, Gaetano, 2013.
"Good luck or good policy? An expectational theory of macro volatility switches,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 37(12), pages 2755-2770.
- Gaballo, G., 2012. "Good Luck or Good Policy? An Expectational Theory of Macro-Volatility Switches," Working papers 402, Banque de France.
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