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Existence of adaptively stable sunspot equilibria near an indeterminate steady state

Evans, George W.; Honkapohja, Seppo - 2001

We examine the nonlinear model Xt = Et F(xt+1) . Markov SSEs exist near an indeterminate steady state, X = F(X), provided F´(X)> 1. We show that there exist Markov SSEs that are E-stable, and therefore locally stable under adaptive learning, if F´(X)< -1.

Persistent link: https://www.econbiz.de/10011398793

Expectational stability of resonant frequency sunspot equilibria

Evans, George W.; Honkapohja, Seppo - 2001

We consider the stability under adaptive learning of the complete set of solutions to the model when . In addition to the fundamentals solution, the literature describes both finite-state Markov sunspot solutions, satisfying a resonant frequency condition, and autoregressive solutions depending...

Persistent link: https://www.econbiz.de/10011398912

Stable sunspot equilibria in a cash-in-advance economy

Evans, George W.; Honkapohja, Seppo; Marimon, Ramon - 2001

We develop a monetary model with flexible supply of labor, cash in advance constraints and government spending financed by seignorage. This model has two regimes. One regime is conventional with two steady states. The other regime has a unique steady state which can be determinate or...

Persistent link: https://www.econbiz.de/10011408407

Are stationary hyperinflation paths learnable?

Adam, Klaus; Evans, George W.; Honkapoja, Seppo - 2003

Earlier studies of the seigniorage inflation model have found that the high-inflation steady state is not stable under adaptive learning. We reconsider this issue and analyze the full set of solutions for the linearized model. Our main focus is on stationary hyperinflationary paths near the...

Persistent link: https://www.econbiz.de/10011507885

Optimal monetary policy when agents are learning

Molnár, Krisztina; Santoro, Sergio - 2010

We derive the optimal monetary policy in a sticky price model when private agents follow adaptive learning. We show that this slight departure from rationality has important implications for policy design. The central bank faces a new intertemporal trade-off, not present under rational...

Persistent link: https://www.econbiz.de/10003974493

Learning stability in economies with heterogenous agents

Honkapohja, Seppo; Mitra, Kaushik - 2002

An economy exhibits structural heterogeneity when the forecasts of different agents have different effects on the determination of aggregate variables. Various forms of structural heterogeneity can arise and we study the important case of economies in which agents' behavior depends on forecasts...

Persistent link: https://www.econbiz.de/10011541172

On the perils of stabilizing prices when agents are learning

Mele, Antonio; Molnár, Krisztina; Santoro, Sergio - 2015

We show that price level stabilization is not optimal in an economy where agents have incomplete knowledge about the policy implemented and try to learn it. A systematically more accommodative policy than what agents expect generates short term gains without triggering an abrupt loss of...

Persistent link: https://www.econbiz.de/10010474823

Heterogeneous expectations, indeterminacy, and postwar US business cycles

Ilabaca, Francisco; Milani, Fabio - 2020

postwar US macroeconomic data can be explained as the outcome of passive monetary policy, indeterminacy, and sunspot … windows and allowing the parameters to fall both in the determinacy and indeterminacy regions. The estimates reveal large … the sample. The results confirm that macroeconomic data in the early windows are better explained by indeterminacy, while …

Persistent link: https://www.econbiz.de/10012200338

Information and preferences for public spending : evidence from representative survey experiments

Lergetporer, Philipp; Schwerdt, Guido; Werner, Katharina; … - 2016

' preferences and the size of government. We devise a series of representative survey experiments in Germany that randomly provide … specific education reforms. Preferences on spending across education levels are also malleable to information. …

Persistent link: https://www.econbiz.de/10011482935

Block-recursive equilibria in heterogenous-agent models

Kaas, Leo - 2020

Equilibrium models with heterogeneous agents and aggregate uncertainty are difficult to analyze since policy functions and market prices depend on the cross-sectional distribution over agents' state variables which is generally a high-dimensional object. This paper develops and applies a general...

Persistent link: https://www.econbiz.de/10012383681

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