Representations and Sunspot Stability
George Evans () and
Bruce McGough ()
University of Oregon Economics Department Working Papers from University of Oregon Economics Department
By endowing his agents with simple forecasting models, or representations, Woodford (1990) found that finite state Markov sunspot equilibria may be stable under learning. We show that common factor representations generalize to all sunspot equilibria the representations used by Woodford (1990). We find that if finite state Markov sunspots are stable under learning then all sunspots are stable under learning, provided common factor representations are used.
Keywords: Indeterminacy; Sunspot Equilibria; E-stability (search for similar items in EconPapers)
JEL-codes: D83 D84 E32 E52 (search for similar items in EconPapers)
Date: 2007-01-01, Revised 2008-08-28
New Economics Papers: this item is included in nep-cba and nep-mac
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Journal Article: REPRESENTATIONS AND SUNSPOT STABILITY (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ore:uoecwp:2007-1
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