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The timing of information updates: a stability result

Listed author(s):
  • Orlando Gomes

    ()

    (ISCAL-IPL; ERC/UNIDE/ISCTE)

We assume an environment where the current value of an aggregate nonstationary variable is generated by weighting the behavior of a large set of agents who choose to form expectations resorting to more or less outdated information concerning the state of the economy. Agents using recent information are able to produce expectations with a strong component of perfect foresight; agents resorting to outdated information will use predominantly the time series of the assumed variable to learn its long-term value. The main result is that a strong degree of information stickiness may imply a departure from stability (a Neimark-Sacker bifurcation occurs).

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File URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I4-P39.pdf
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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 29 (2009)
Issue (Month): 4 ()
Pages: 2860-2869

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Handle: RePEc:ebl:ecbull:eb-09-00463
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  1. N. Gregory Mankiw & Ricardo Reis, 2002. "Sticky Information versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1295-1328.
  2. Schonhofer, Martin, 1999. "Chaotic Learning Equilibria," Journal of Economic Theory, Elsevier, vol. 89(1), pages 1-20, November.
  3. N. Gregory Mankiw & Ricardo Reis, 2007. "Sticky Information in General Equilibrium," Journal of the European Economic Association, MIT Press, vol. 5(2-3), pages 603-613, 04-05.
  4. Ricardo Reis, 2006. "Inattentive Producers," Review of Economic Studies, Oxford University Press, vol. 73(3), pages 793-821.
  5. Hommes, Cars H. & Rosser,, J. Barkley, 2001. "Consistent Expectations Equilibria And Complex Dynamics In Renewable Resource Markets," Macroeconomic Dynamics, Cambridge University Press, vol. 5(02), pages 180-203, April.
  6. Bullard James, 1994. "Learning Equilibria," Journal of Economic Theory, Elsevier, vol. 64(2), pages 468-485, December.
  7. Jan Tuinstra & Florian Wagener, 2007. "On learning equilibria," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(3), pages 493-513, March.
  8. Hommes, Cars & Sorger, Gerhard, 1998. "Consistent Expectations Equilibria," Macroeconomic Dynamics, Cambridge University Press, vol. 2(03), pages 287-321, September.
  9. N. Gregory Mankiw & Ricardo Reis, 2006. "Pervasive Stickiness," American Economic Review, American Economic Association, vol. 96(2), pages 164-169, May.
  10. Sorger, Gerhard, 1998. "Imperfect foresight and chaos: an example of a self-fulfilling mistake," Journal of Economic Behavior & Organization, Elsevier, vol. 33(3-4), pages 363-383, January.
  11. Schonhofer, Martin, 2001. "Can agents learn their way out of chaos?," Journal of Economic Behavior & Organization, Elsevier, vol. 44(1), pages 71-83, January.
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