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A Strong Correspondence Principle for Smooth, Monotone Environments

Finn Christensen () and Christopher Cornwell ()
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Christopher Cornwell: Department of Mathematics, Towson University

No 2016-05, Working Papers from Towson University, Department of Economics

Abstract: In discrete time dynamic systems that are locally monotone, we show that comparative statics are well-behaved if and only if equilibrium is exponentially stable. In addition, subject to boundary conditions but without local monotonicity, we show that the number of equilibria is finite and odd, and if every equilibrium is stable then there is exactly one. The results, which are applied to best response dynamics and adaptive dynamics, expand the scope of the correspondence principle to include a relationship between stability and uniqueness.

Keywords: correspondence principle; stability; comparative statics; uniqueness; best response dynamics; adaptive dynamics; M-matrix. (search for similar items in EconPapers)
JEL-codes: D5 C7 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth
Date: 2016-03, Revised 2017-03
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