Another weakness of "determinacy" as a selection criterion for rational expectations models
AbstractThis paper argues against determinacy as a guide to interpret rational expectations solutions, using an example in which a determinate solution exists but differs sharply in dynamic behavior from that implied by the model considered on a sector-by-sector basis.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 104 (2009)
Issue (Month): 1 (July)
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Web page: http://www.elsevier.com/locate/ecolet
Determinacy Stability Rational expectations;
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NBER Working Papers
12441, National Bureau of Economic Research, Inc.
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- James B. Bullard, 2006. "The learnability criterion and monetary policy," Review, Federal Reserve Bank of St. Louis, issue May, pages 203-217.
- Klein, Paul, 2000. "Using the generalized Schur form to solve a multivariate linear rational expectations model," Journal of Economic Dynamics and Control, Elsevier, vol. 24(10), pages 1405-1423, September.
- Mostafavi, Moeen & Fatehi, Ali-Reza & Shakouri G., Hamed & Von zur Muehlen, Peter, 2011. "A predictive multi-agent approach to model systems with linear rational expectations," MPRA Paper 35351, University Library of Munich, Germany, revised 11 Dec 2011.
- Seonghoon Cho & Bennett T. McCallum, 2012. "Refining Linear Rational Expectations Models and Equilibria," NBER Working Papers 18348, National Bureau of Economic Research, Inc.
- Bennett T. McCallum, 2009. "The Role of "Determinacy" in Monetary Policy Analysis," IMES Discussion Paper Series 09-E-17, Institute for Monetary and Economic Studies, Bank of Japan.
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