Determinate perfect foresight forecasting in overlapping generations models

Eungsik Kim () and Stephen Spear ()
Additional contact information
Eungsik Kim: University of Kansas

Economic Theory, 2021, vol. 71, issue 2, No 5, 505-531

Abstract: Abstract In this paper, we show the existence of the perfect foresight forecast functions which generate unique and stable equilibrium price dynamics for comparative static analysis and calibration in multi-period overlapping generations models with cohort heterogeneity, multiple goods, and fiat money. We also show how to recover such forecast functions up to the first order using the eigenvalues and eigenvectors of the Jacobian matrix of the equilibrium conditions. In a special one good case, our construction of the forecast functions requires information about only the eigenvalues. In addition, we demonstrate that the stable subspace where the price sequences generated by the linearized forecast functions exist is also an invariant cyclic subspace.

Keywords: Perfect foresight forecasts; Determinacy of equilibrium; Overlapping generations models; Multi-periods; Multi-goods (search for similar items in EconPapers)
JEL-codes: C61 D51 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s00199-020-01254-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joecth:v:71:y:2021:i:2:d:10.1007_s00199-020-01254-4

Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/199/PS2

DOI: 10.1007/s00199-020-01254-4

Access Statistics for this article

Economic Theory is currently edited by Nichoals Yanneils

More articles in Economic Theory from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().