Existence of Adaptively Stable Sunspot Equilibria Near an Indeterminate Steady State

George William Evans () and Seppo Mikko Sakari Honkapohja ()

No CESifo Working Paper No. 478, CESifo Working Paper Series from CESifo Group Munich

Abstract: 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.

Keywords: Indeterminacy; learnability; expectational stability; endogenous fluctuations (search for similar items in EconPapers)
JEL-codes: C62 D83 D84 E31 E32 (search for similar items in EconPapers)
Date: 2001
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Related works:
Working Paper: Existence of Adaptively Stable Sunspot Equilibria near an Indeterminate Steady State (2002)
Journal Article: Existence of adaptively stable sunspot equilibria near an indeterminate steady state (2003)
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