Global convergence of adaptive learning in models of pure exchange

Jan Wenzelburger ()

Economic Theory, 2002, vol. 19, issue 4, 649-672

Abstract: This paper develops an adaptive learning scheme for a standard version of the OLG model with pure exchange. Perfect forecasting rules which generate perfect foresight orbits are approximated by cubic spline functions. These approximations are successively constructed using historical data only. Trajectories generated by this scheme converge to perfect foresight orbits globally for all initial conditions. This result holds for all parameterizations guaranteeing the existence of a monetary steady state and hence is independent of consumers' savings behavior. It generalizes to all one-dimensional models of the Cobweb type.

Keywords: Learning dynamics; Rational expectations; Bounded rationality. (search for similar items in EconPapers)
JEL-codes: D83 D84 (search for similar items in EconPapers)
Date: 2002-02-06
Note: Received: October 5, 2000; revised version: February 15, 2001
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Citations: View citations in EconPapers (8)

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