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Expectations in Macroeconomics Adaptive versus Eductive Learning

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  • George William Evans

Abstract

Rational expectations solutions to macroeconomic models are equilibria requiring the coordination of expectations, and one can investigate the local stability of these solutions under alternative learning rules. Eductive (mental) approaches to learning have somewhat stricter stability conditions than do adaptive (statistical) approaches, as we illustrate using three economic models. The expectational stability principle can be used to understand the relationship between the corresponding stability conditions. This principle also provides insight into the persistent learning dynamics that can arise under modified adaptive learning rules.

Suggested Citation

  • George William Evans, 2001. "Expectations in Macroeconomics Adaptive versus Eductive Learning," Revue économique, Presses de Sciences-Po, vol. 52(3), pages 573-582.
  • Handle: RePEc:cai:recosp:reco_523_0573
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    Cited by:

    1. Roger Guesnerie, 2008. "Macroeconomic and monetary policies from the "eductive" viewpoint," Working Papers halshs-00586749, HAL.
    2. George W. Evans & Seppo Honkapohja, 2003. "Adaptive learning and monetary policy design," Proceedings, Federal Reserve Bank of Cleveland, pages 1045-1084.
    3. Evans, George W. & Guesnerie, Roger, 2005. "Coordination on saddle-path solutions: the eductive viewpoint--linear multivariate models," Journal of Economic Theory, Elsevier, vol. 124(2), pages 202-229, October.
    4. Bao, Te & Duffy, John, 2016. "Adaptive versus eductive learning: Theory and evidence," European Economic Review, Elsevier, vol. 83(C), pages 64-89.
    5. Dennis, Richard & Kirsanova, Tatiana, 2010. "Expectations Traps and Coordination Failures: Selecting among Multiple Discretionary Equilibria," MPRA Paper 24616, University Library of Munich, Germany.
    6. Holtemöller, Oliver & Schult, Christoph, 2018. "Expectation formation, financial frictions, and forecasting performance of dynamic stochastic general equilibrium models," IWH Discussion Papers 15/2018, Halle Institute for Economic Research (IWH).
    7. G. Gaballo, 2014. "Sequential Coordination, Higher-Order Belief Dynamics and E-Stability Principle," Working papers 509, Banque de France.
    8. Gaballo, Gaetano, 2014. "Sequential coordination, higher-order belief dynamics and the E-stability principle," Journal of Economic Dynamics and Control, Elsevier, vol. 44(C), pages 270-279.
    9. Fred Schroyen & Adekola Oyenuga, 2011. "Optimal pricing and capacity choice for a public service under risk of interruption," Journal of Regulatory Economics, Springer, vol. 39(3), pages 252-272, June.

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