Understanding Self-Fulfilling Rational Expectations Equilibria in Real Business Cycle Models

Yi Wen

Working Papers from Cornell University, Center for Analytic Economics

Abstract: Necessary conditions for indeterminacy in standard RBC models have been extensively studied, but intuitive understanding of the economic mechanism that generates indeterminacy has yet to be fully explored. Following the permanent income theory, this paper provides an alternative framework for understanding and deriving the technical conditions of indeterminacy in RBC models. A virtue of this approach is that in deriving the conditions of indeterminacy, one can see clearly not only how indeterminacy arises but also how robust the indeterminacy is to structural perturbations in preferences, technologies, and market structures.

JEL-codes: E13 E32 (search for similar items in EconPapers)
Date: 2000
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https://cae.economics.cornell.edu/jedc_1.pdf

Related works:
Journal Article: Understanding self-fulfilling rational expectations equilibria in real business cycle models (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:corcae:00-02

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