Another weakness of "determinacy" as a selection criterion for rational expectations models
This paper argues against determinacy as a guide to interpret rational expectations solutions, using an example in which a determinate solution exists but differs sharply in dynamic behavior from that implied by the model considered on a sector-by-sector basis.
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- King, Robert G & Watson, Mark W, 1998. "The Solution of Singular Linear Difference Systems under Rational Expectations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(4), pages 1015-1026, November.
- James B. Bullard, 2006. "The learnability criterion and monetary policy," Review, Federal Reserve Bank of St. Louis, issue May, pages 203-217.
- Bullard, James & Mitra, Kaushik, 2002.
"Learning about monetary policy rules,"
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Elsevier, vol. 49(6), pages 1105-1129, September.
- Bennett McCallum, "undated".
"Multiple-Solution Indeterminacies in Monetary Policy Analysis,"
GSIA Working Papers
2003-E77, Carnegie Mellon University, Tepper School of Business.
- McCallum, Bennett T., 2003. "Multiple-solution indeterminacies in monetary policy analysis," Journal of Monetary Economics, Elsevier, vol. 50(5), pages 1153-1175, July.
- Bennett T. McCallum, 2003. "Multiple-Solution Indeterminacies in Monetary Policy Analysis," NBER Working Papers 9837, National Bureau of Economic Research, Inc.
- Blanchard, Olivier Jean & Kahn, Charles M, 1980. "The Solution of Linear Difference Models under Rational Expectations," Econometrica, Econometric Society, vol. 48(5), pages 1305-1311, July.
- Klein, Paul, 2000. "Using the generalized Schur form to solve a multivariate linear rational expectations model," Journal of Economic Dynamics and Control, Elsevier, vol. 24(10), pages 1405-1423, September.
- Bennett T. McCallum, 2006.
"E-Stability vis-a-vis Determinacy Results for a Broad Class of Linear Rational Expectations Models,"
NBER Working Papers
12441, National Bureau of Economic Research, Inc.
- McCallum, Bennett T., 2007. "E-stability vis-a-vis determinacy results for a broad class of linear rational expectations models," Journal of Economic Dynamics and Control, Elsevier, vol. 31(4), pages 1376-1391, April.
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