How to Get the Blanchard-Kahn Form from a General Linear Rational Expectations Model
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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- Blanchard, Olivier Jean & Kahn, Charles M, 1980. "The Solution of Linear Difference Models under Rational Expectations," Econometrica, Econometric Society, vol. 48(5), pages 1305-1311, July.
- Laurence Broze & Christian Gourieroux & Ariane Szafarz, 1990. "Reduced Forms of Rational Expectations Models," ULB Institutional Repository 2013/647, ULB -- Universite Libre de Bruxelles.
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- Boucekkine, Raouf & Le Van, Cuong, 1996. "Checking for Saddlepoint Stability: An Easy Test," Computational Economics, Springer;Society for Computational Economics, vol. 9(4), pages 317-330, November. Full references (including those not matched with items on IDEAS)
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