Sunspot equilibria out of the stable manifold
In this paper, we propose a simple geometrical method to study the occurrence of sunspot equilibria near an indeterminate steady state of a non-linear, two-dimensional economic model without any predetermined variable. We prove that, if the steady state is a saddle point of the perfect foresight dynamical system and the economy is truly nonlinear, then there exist Markovian sunspot equilibria on a compact two-dimensional set
|Date of creation:||04 Feb 1998|
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