Saddlepath learning occurs when agents learn adaptively using a perceived law of motion that has the same form as the saddlepath relationship in rational expectations equilibrium. Under saddlepath learning, we obtain a completely general relationship between determinacy and e-stability, and generalise minimum state variable results previously derived only under full information. When the system is determinate, we show that a learning process based on the saddlepath is always e-stable. When the system is indeterminate, we find there is a unique MSV solution that is iteratively e-stable. However, in this case there is a sunspot solution that is learnable as well. We conclude by demonstrating that our results hold for any information set.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- 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.
- Bennett McCallum, 1999.
"Role of the Minimal State Variable Criterion in Rational Expectations Models,"
International Tax and Public Finance,
Springer, vol. 6(4), pages 621-639, November.
- Bennett T. McCallum, . "Role of the minimal state variable criterion in rational expectations models," GSIA Working Papers 1999-13, Carnegie Mellon University, Tepper School of Business.
- Bennett T. McCallum, 1981.
"On Non-Uniqueness in Rational Expectations Models: An Attempt at Perspective,"
NBER Working Papers
0684, National Bureau of Economic Research, Inc.
- McCallum, Bennett T., 1983. "On non-uniqueness in rational expectations models : An attempt at perspective," Journal of Monetary Economics, Elsevier, vol. 11(2), pages 139-168.
- Sargent, Thomas J & Wallace, Neil, 1973. "Rational Expectations and the Dynamics of Hyperinflation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(2), pages 328-50, June.
- Chryssi Giannitsarou, 2004.
"Supply-side reforms and learning dynamics,"
Money Macro and Finance (MMF) Research Group Conference 2003
36, Money Macro and Finance Research Group.
- 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.
- Blanchard, Olivier Jean & Kahn, Charles M, 1980. "The Solution of Linear Difference Models under Rational Expectations," Econometrica, Econometric Society, vol. 48(5), pages 1305-11, July.
- Kaushik Mitra & James Bullard, .
"Learning About Monetary Policy Rules,"
00/41, Department of Economics, University of York.
- Klaus Adam & George W. Evans & Seppo Honkapoja, 2003.
"Are Stationary Hyperinflation Paths Learnable?,"
CESifo Working Paper Series
936, CESifo Group Munich.
- McCallum, Bennett T., 1998.
"Solutions to linear rational expectations models: a compact exposition,"
Elsevier, vol. 61(2), pages 143-147, November.
- Bennett T. McCallum, 1998. "Solutions to Linear Rational Expectations Models: A Compact Exposition," NBER Technical Working Papers 0232, National Bureau of Economic Research, Inc.
- Vitor Gaspar & Frank Smets & David Vestin, 2006.
"Adaptive Learning, Persistence, and Optimal Monetary Policy,"
Journal of the European Economic Association,
MIT Press, vol. 4(2-3), pages 376-385, 04-05.
- Gaspar, Vítor & Smets, Frank & Vestin, David, 2006. "Adaptive learning, persistence, and optimal monetary policy," Working Paper Series 0644, European Central Bank.
- Bennett T. McCallum, 2003.
"The Unique Minimum State Variable RE Solution is E-Stable in All Well Formulated Linear Models,"
NBER Working Papers
9960, National Bureau of Economic Research, Inc.
- Bennett T. McCallum, 2002. "The Unique Minimum State Variable RE Soluiton is E-Stable in All Well Formulated Linear Models," GSIA Working Papers 2003-25, Carnegie Mellon University, Tepper School of Business.
- Klaus Adam, 2003.
"Learning and Equilibrium Selection in a Monetary Overlapping Generations Model with Sticky Prices,"
Review of Economic Studies,
Oxford University Press, vol. 70(4), pages 887-907.
- Klaus Adam, 2003. "Learning and Equilibrium Selection in a Monetary Overlapping Generations Model with Sticky Prices," Review of Economic Studies, Wiley Blackwell, vol. 70(4), pages 887-907, October.
- Adam, Klaus, 2003. "Learning and Equilibrium Selection in a Monetary Overlapping Generations Model with Sticky Prices," CFS Working Paper Series 2003/03, Center for Financial Studies (CFS).
- James Bullard & Stefano Eusepi, 2014.
"When Does Determinacy Imply Expectational Stability?,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 1-22, 02.
- James B. Bullard & Stefano Eusepi, 2009. "When does determinacy imply expectational stability?," Working Papers 2008-007, Federal Reserve Bank of St. Louis.
- Stefano Eusepi & James Bullard, 2008. "When Does Determinacy Imply Expectational Stability?," 2008 Meeting Papers 897, Society for Economic Dynamics.
When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:146:y:2011:i:4:p:1500-1519. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.