STABILITY AND CYCLES IN A COBWEB MODEL WITH HETEROGENEOUS EXPECTATIONS

Laurence Lasselle, Serge Svizzero and Clement Tisdell

Macroeconomic Dynamics, 2005, vol. 9, issue 5, 630-650

Abstract: We investigate the dynamics of a cobweb model with heterogeneous beliefs, generalizing the example of Brock and Hommes (1997). We examine situations where the agents form expectations by using either rational expectations, or a type of adaptive expectations with limited memory defined from the last two prices. We specify conditions that generate cycles. These conditions depend on a set of factors that includes the intensity of switching between beliefs and the adaption parameter. We show that both Flip bifurcation and Neimark–Sacker bifurcation can occur as primary bifurcation when the steady state is unstable.

Date: 2005
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Working Paper: Stability and cycles in a cobweb model with heterogeneous expectations (2005)
Working Paper: Stability and Cycles in a Cobweb Model with Heterogeneous Expectations (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:cup:macdyn:v:9:y:2005:i:05:p:630-650_05

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