Temporary Equilibrium Dynamics with Bayesian Learning
AbstractThis paper examines the stability of deterministic steady-states in a class of economies where the state -variable is one dimensional and where agents use Bayesian techniques to form expectations. Thr dynamics with learning are locally convergent if the prior mean is close to a stable perfect foresight root having modulus less than 1 and if the prior beliefs are held with enough confidence. Thr dynamics are however divergent if the prior mean or the variance of the prior distribution is sufficiently large.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Theory.
Volume (Year): 67 (1995)
Issue (Month): 2 (December)
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Web page: http://www.elsevier.com/locate/inca/622869
Other versions of this item:
- Shurojit Chatterji, 1995. "Temporary Eq'Uilibrium Dynamics With Bayesian Learning," Working Papers. Serie AD 1995-09, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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- Wilfredo Leiva, 1999. "Adaptive learning in models with lagged variables," Economics Working Papers 413, Department of Economics and Business, Universitat Pompeu Fabra.
- Shurojit Chatterji & Ignacio N. Lobato, 2010.
"Transformations of the state variable and learning dynamics,"
International Journal of Economic Theory,
The International Society for Economic Theory, vol. 6(4), pages 385-403.
- Shurojit Chatterji & Ignacio Lobato, 2007. "Transformations of the State Variable and Learning Dynamics," Working Papers 0708, Centro de Investigacion Economica, ITAM.
- Shurojit Chatterji & Ignacio Lobato, 2009. "Transformations of the State Variable and Learning Dynamics," Working Papers 0902, Centro de Investigacion Economica, ITAM.
- Chatterji, Shurojit, 2004. "Subjective temporary equilibrium," Journal of Economic Dynamics and Control, Elsevier, vol. 28(9), pages 1757-1780, July.
- Araújo, Aloísio Pessoa de & Maldonado, Wilfredo L., 2001. "A Note on Learning Chaotic Sunspot Equilibrium," Economics Working Papers (Ensaios Economicos da EPGE) 423, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
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