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Local Learning Dynamics

Author

Listed:
  • Orlando Gomes

    (Escola Superior de Comunicação Social (IPL) and Economics Research Center (ERC - UNIDE/ISCTE))

Abstract

The paper undertakes a detailed characterization of the local dynamic properties of three simple deterministic models involving expectations. The expectations are formed under an adaptive learning process. Allowing for different degrees of learning quality, the analysis reveals the existence of a large variety of possible long term outcomes: in some scenarios, stability and instability are independent of the learning quality in other circumstances, some minimal requirement on learning efficiency is necessary to attain stability in some settings, it is even possible that high quality learning may prevent attaining the stable outcome that otherwise is accomplished.

Suggested Citation

  • Orlando Gomes, 2008. "Local Learning Dynamics," Economics Bulletin, AccessEcon, vol. 3(57), pages 1-15.
    • Handle: RePEc:ebl:ecbull:eb-08c60005
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    References listed on IDEAS

    as
    1. Marcet, Albert & Sargent, Thomas J., 1989. "Convergence of least squares learning mechanisms in self-referential linear stochastic models," Journal of Economic Theory, Elsevier, vol. 48(2), pages 337-368, August.
    2. Klaus Adam & Albert Marcet & Juan Pablo Nicolini, 2016. "Stock Market Volatility and Learning," Journal of Finance, American Finance Association, vol. 71(1), pages 33-82, February.
    3. Schonhofer, Martin, 1999. "Chaotic Learning Equilibria," Journal of Economic Theory, Elsevier, vol. 89(1), pages 1-20, November.
    4. George W. Evans & Seppo Honkapohja, 2009. "Expectations, Learning and Monetary Policy: An Overview of Recent Research," Central Banking, Analysis, and Economic Policies Book Series, in: Klaus Schmidt-Hebbel & Carl E. Walsh & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series (ed.),Monetary Policy under Uncertainty and Learning, edition 1, volume 13, chapter 2, pages 027-076, Central Bank of Chile.
    5. Koulovatianos, Christos & Mirman, Leonard J. & Santugini, Marc, 2009. "Optimal growth and uncertainty: Learning," Journal of Economic Theory, Elsevier, vol. 144(1), pages 280-295, January.
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    Cited by:

    1. Orlando Gomes, 2010. "Ordinary Least Squares Learning And Nonlinearities In Macroeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 24(1), pages 52-84, February.

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    More about this item

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • E0 - Macroeconomics and Monetary Economics - - General

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