IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

On learning and the stability of cycles

Author Info

  • James Bullard
  • John Duffy

Abstract

We study a general equilibrium model where the multiplicity of stationary periodic perfect foresight equilibria is pervasive. We investigate the extent of which agents can learn to coordinate on stationary perfect foresight cycles. The example economy, taken from Grandmont (1985), is an endowment overlapping generations model with fiat money, where consumption in the first and second periods of life are not necessarily gross substitutes. Depending on the value of a preference parameter, the limiting backward (direction of time reversed) perfect foresight dynamics are characterized by steady state, periodic, or chaotic trajectories for real money balances. We relax the perfect foresight assumption and examine how a population of artificial, heterogeneous adaptive agents might learn in such an environment. These artificial agents optimize given their forecasts of future prices, and they use forecast rules that are consistent with steady state or periodic trajectories for prices. The agents' forecast rules are updated by a genetic algorithm. We find that the population of artificial adaptive agents is able to eventually coordinate on steady state and low-order cycles, but not on the higher-order periodic equilibria that exist under the perfect foresight assumption.

Download Info

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.

File URL: http://research.stlouisfed.org/wp/more/1995-006/
Download Restriction: no
File URL: http://research.stlouisfed.org/wp/1995/95-006.pdf
Download Restriction: no

Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 1995-006.

as
in new window

Length:
Date of creation: 1995
Date of revision:
Publication status: Published in Macroeconomic Dynamics, v. 2, no. 1 (March 1998) pp. 22-48
Handle: RePEc:fip:fedlwp:1995-006
Contact details of provider: Postal: P.O. Box 442, St. Louis, MO 63166
Fax: (314)444-8753
Web page: http://www.stlouisfed.org/
More information through EDIRC

Order Information: Email:


Keywords: Business cycles;

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.:

as in new window
  1. Arifovic, Jasmina, 1996. "The Behavior of the Exchange Rate in the Genetic Algorithm and Experimental Economies," Journal of Political Economy, University of Chicago Press, vol. 104(3), pages 510-41, June.
  2. Arifovic, Jasmina, 1995. "Genetic algorithms and inflationary economies," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 219-243, August.
  3. Arifovic, Jasmina, 1994. "Genetic algorithm learning and the cobweb model," Journal of Economic Dynamics and Control, Elsevier, vol. 18(1), pages 3-28, January.
  4. Andreoni James & Miller John H., 1995. "Auctions with Artificial Adaptive Agents," Games and Economic Behavior, Elsevier, vol. 10(1), pages 39-64, July.
Full references (including those not matched with items on IDEAS)

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

as in new window


Cited by:

  1. Barnett, Richard C. & Bhattacharya, Joydeep & Bunzel, Helle, 2007. "Minimum Consumption Requirements and Cycles in an Overlapping Generations Model of Money," Staff General Research Papers 12834, Iowa State University, Department of Economics.
  2. Shu-Heng Chen & Chia-Hsuan Yeh, 1999. "Evolving Traders and the Faculty of the Business School: A New Architecture of the Artificial Stock Market," Computing in Economics and Finance 1999 613, Society for Computational Economics.
  3. Brock, W.A. & Hommes, C.H. & Wagener, F.O.O., 2006. "More hedging instruments may destabilize markets," CeNDEF Working Papers 06-12, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  4. Stefano Eusepi, 2005. "Comparing forecast-based and backward-looking Taylor rules: a "global" analysis," Staff Reports 198, Federal Reserve Bank of New York.
  5. Arifovic, Jasmina & Bullard, James & Duffy, John, 1997. " The Transition from Stagnation to Growth: An Adaptive Learning Approach," Journal of Economic Growth, Springer, vol. 2(2), pages 185-209, July.
  6. James Bullard & John Duffy, 2010. "Using genetic algorithms to model the evolution of heterogenous beliefs," Levine's Working Paper Archive 550, David K. Levine.
  7. Negroni, Giorgio, 2005. "Eductive expectations coordination on deterministic cycles in an economy with heterogeneous agents," Journal of Economic Dynamics and Control, Elsevier, vol. 29(5), pages 931-952, May.
  8. repec:dgr:uvatin:20060080 is not listed on IDEAS
  9. Richard C. Barnett & Joydeep Bhattacharya & Helle Bunzel, 2007. "Resurrecting Equilibria Through Cycles," Economics Working Papers 2007-12, School of Economics and Management, University of Aarhus.
  10. James Bullard & Jasmina Arifovic & John Duffy, 1995. "Learning in a model of economic growth and development," Working Papers 1995-017, Federal Reserve Bank of St. Louis.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Access and download statistics

When requesting a correction, please mention this item's handle: RePEc:fip:fedlwp:1995-006. 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: (Anna Xiao)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.