Rational Expectations Business Cycles in Search Equilibrium

Drew Fudenberg and Peter Diamond

Scholarly Articles from Harvard University Department of Economics

Abstract: We examine the rational expectations equilibrium paths of the model of search and barter in Diamond's "Aggregate Demand Management in Search Equilibrium." For some initial positions, there are two equilibrium paths converging to different steady states, with the high-activity path Pareto-dominating the low-activity path, With some parameters there is also a continuum of equilibrium paths converging to another steady state. Moreover, there can be cycles that are equilibrium' paths, even though the environment is stationary.

Date: 1989
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Published in Journal of Political Economy

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Related works:
Journal Article: Rational Expectations Business Cycles in Search Equilibrium (1989)
Working Paper: Rational Expectations Business Cycles in Search Equilibrium (1987)
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Persistent link: https://EconPapers.repec.org/RePEc:hrv:faseco:3374509

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