Convergence for difference equations with vanishing time-dependence, with applications to adaptive learning
George Evans () and
Seppo Honkapohja ()
Economic Theory, 2000, vol. 15, issue 3, 717-725
We provide conditions for local stability and instability of an equilibrium point in certain systems of nonautonomous nonstochastic difference equations. In the systems under study the influence of time is present through a positive scalar "gain" parameter which converges in the limit to zero. These systems have recently been used to study the dynamics of adaptive learning in economic models, and we provide two economic illustrations of the formal results.
Keywords: Learning; Stability; Instability; Rational expectations. (search for similar items in EconPapers)
JEL-codes: C62 D83 D84 (search for similar items in EconPapers)
Note: Received: October 7, 1997; revised version: February 8, 1999
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