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The E-Correspondence Principle

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  • George W. Evans
  • Seppo Honkapohja

Abstract

We introduce the E-correspondence principle for stochastic dynamic expectations models as a tool for comparative dynamics analysis. The principle is applicable to equilibria that are stable under least squares and closely related learning rules. With this technique it is possible to study, without explicit solving for the equilibrium, how properties of the equilibrium are affected by changes in the structural parameters of the model. Even when qualitative comparative dynamics results are not obtainable, a quantitative version of the principle can be applied.

Suggested Citation

  • George W. Evans & Seppo Honkapohja, 2004. "The E-Correspondence Principle," CESifo Working Paper Series 1112, CESifo.
    • Handle: RePEc:ces:ceswps:_1112
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp1112.pdf
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    References listed on IDEAS

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    1. 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.
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    Cited by:

    1. W D A Bryant, 2009. "General Equilibrium:Theory and Evidence," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 6875, January.
    2. Paul Oslington, 2012. "General Equilibrium: Theory and Evidence," The Economic Record, The Economic Society of Australia, vol. 88(282), pages 446-448, September.

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