Global Stability in Spite of "Local Instability" with Learning in General Equilibrium Models: A Generalization

Shurojit Chatterji and S. Chattopadhyay

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: In this paper we identify a simple property of nonlinear temporary equilibrium map (TEM) that guarantees that all trajectories, along which the dynamics of the state variable remain bounded, converge to the steady state-in particular, the locally divergent trajactories also are driven back to the steady state. This property if used to show that one may get globally stable learning dynamics in spite of "locally unstable"behaviour in realistic economic models.

Keywords: LINEAR; MODELS (search for similar items in EconPapers)
JEL-codes: C10 C11 (search for similar items in EconPapers)
Date: 1996

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Persistent link: http://EconPapers.repec.org/RePEc:aub:autbar:329.96

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