STABILITY OF EQUILIBRIA UNDER GENETIC-ALGORITHM ADAPTATION: AN ANALYSIS

Jasmina Arifovic

Macroeconomic Dynamics, 1998, vol. 2, issue 1, 1-21

Abstract: The stability of stationary equilibria under genetic-algorithm adaptation is studied in an overlapping-generations economy with a unique, monetary steady-state and two-period cyclic equilibria. Agents use the genetic algorithm to update their labor-supply decisions. The results of simulations and the analysis of the dynamics show that the two-period cycle is stable and that the steady-state equilibrium is unstable under genetic-algorithm adaptation. The dynamics are driven primarily by the wealth and substitution effects that lead to the algorithm's convergence to the two-period cycle.

Date: 1998
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