The E-correspondence Principle
We introduce the E-correspondence principle for stochastic dynamic expectations models as a tool for comparative dynamics analysis. The principle is applicable to equilibria that are stable under least squares and closely related learning rules. With this technique it is possible to study, without explicit solving for the equilibrium, how properties of the equilibrium are affected by changes in the structural parameters of the model. Even if qualitative comparative dynamics results are not obtainable, a quantitative version of the principle can be applied.
|Date of creation:||01 Jun 2003|
|Date of revision:||10 Jun 2005|
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- Evans, George W. & Honkapohja, Seppo, 2003.
"Existence of adaptively stable sunspot equilibria near an indeterminate steady state,"
Journal of Economic Theory,
Elsevier, vol. 111(1), pages 125-134, July.
- George W. Evans & Seppo Honkapohja, 2001. "Existence of Adaptively Stable Sunspot Equilibria Near an Indeterminate Steady State," CESifo Working Paper Series 478, CESifo Group Munich.
- George W. Evans & Seppo Honkapohja, 2002. "Existence of Adaptively Stable Sunspot Equilibria near an Indeterminate Steady State," University of Oregon Economics Department Working Papers 2002-9, University of Oregon Economics Department, revised 06 Apr 2002.
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