Comment on Assenza and Berardi "Learning in a Credit Economy" (2009, JEDC)

This comment shows that the "optimality" conditions in Assenza and Berardi (2009, JEDC) "Learning in a Credit Economy" imply that agents' "optimal" choices are either suboptimal or infeasible. It presents the correct optimality conditions and discusses the effect on the E-stability condition of the REE. In addition, the different dynamics under the two sets of conditions is illustrated by considering an unexpected productivity impulse. Finally, under heterogeneous learning rules, numerical simulations illustrate that bankruptcy on the part of the borrowers arises sooner as they track the economy faster.