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How to Get the Blanchard-Kahn Form from a General Linear Rational Expectations Model

  • Raouf Boucekkine

    ()

    (Universidad Carlos III de Madrid)

  • Cuong Le Van

    ()

    (CEPREMAP, Paris)

  • Katheline Schubert

    (Universt Paris I)

In this paper we prove that every linear model with rational expectations can be transformed by means of an one-to-one mapping into another model which has one of the following properties: i) it is degenerated, ii) it is backward, iii) it has a Blanchard-Kahn form. In addition to some simple illustrations, we provide two applications on two nonlinear forward-looking economic models in order to show how to use our theoretical analysis for local stability assessement.

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Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 1996 with number _035.

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Handle: RePEc:sce:scecf6:_035
Contact details of provider: Postal: Department of Econometrics, University of Geneva, 102 Bd Carl-Vogt, 1211 Geneva 4, Switzerland
Web page: http://www.unige.ch/ce/ce96/welcome.html

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  1. Greenwood, Jeremy & Hercowitz, Zvi & Huffman, Gregory W, 1988. "Investment, Capacity Utilization, and the Real Business Cycle," American Economic Review, American Economic Association, vol. 78(3), pages 402-17, June.
  2. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-47, April.
  3. 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.
  4. Laurence Broze & Christian Gouriéroux & Ariane Szafarz, 1990. "Reduced Forms of Rational Expectations Models," ULB Institutional Repository 2013/647, ULB -- Universite Libre de Bruxelles.
  5. Boucekkine, Raouf & Le Van, Cuong, 1996. "Checking for Saddlepoint Stability: An Easy Test," Computational Economics, Society for Computational Economics, vol. 9(4), pages 317-30, November.
  6. King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : I. The basic neoclassical model," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 195-232.
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