Existence of Adaptively Stable Sunspot Equilibria near an Indeterminate Steady State
We examine the nonlinear model x_t = E_t F(x_(t+1)). Markov SSEs exist near an indeterminate steady state, hat(x)=F(hat(x)), provided |F'(hat(x)| > 1. Despite the importance of indeterminancy in macroeconomics, earlier results have not provided conditions for the existance of adaptively stable SSEs near an indeterminate steady state. We show that there exists Markov SSEs near hat(x) that are E-stable, and therefore locally stable under adaptive learning, if F'(hat(x))
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| Length: | 13 |
| Date of creation: | 06 Apr 2002 |
| Date of revision: | 06 Apr 2002 |
| Handle: | RePEc:ore:uoecwp:2002-9 |
| Contact details of provider: | Postal: 1285 University of Oregon, 435 PLC, Eugene, OR 97403-1285 Phone: (541) 346-8845 Fax: (541) 346-1243 Web page: http://economics.uoregon.edu/ Email: More information through EDIRC
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