This article studies a version of Obstfeld's (Journal of International Economics 43 (1997), 61-77) "escape clause" model. The model is calibrated to produce three rational expectations equilibria. Two of these equilibria are E-stable and one is unstable. Dynamics are introduced by assuming that...

This paper examines the ordinary least squares (OLS) estimator of the structural parameters in a class of stylised macroeconomic models in which agents are boundedly rational and use an adaptive learning rule to form expectations of the endogenous variable. The popularity of this type of model...