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) indeterminacy. Hence, expectations matter for resulting equilibrium dynamics. Despite its simplicity, the model creates a rich set … fundamentals in models with indeterminacy. The model is applied to replicate two striking empirical characteristics of …
Persistent link: https://www.econbiz.de/10010309230
persistence than standard RBC models and can exhibit indeterminacy of rational expectations paths without increasing returns in …
Persistent link: https://www.econbiz.de/10010310356
growth model can be a potential source of local indeterminacy. He also shows that on a high-growth path, the government, by …
Persistent link: https://www.econbiz.de/10010311604
We consider the stability under adaptive learning of the complete set of solutions to the model when . In addition to the fundamentals solution, the literature describes both finite-state Markov sunspot solutions, satisfying a resonant frequency condition, and autoregressive solutions depending...
Persistent link: https://www.econbiz.de/10010315168
We examine the nonlinear model Xt = Et F(xt+1) . Markov SSEs exist near an indeterminate steady state, X = F(X), provided F´(X)> 1. We show that there exist Markov SSEs that are E-stable, and therefore locally stable under adaptive learning, if F´(X)< -1.
Persistent link: https://www.econbiz.de/10010315235
We develop a monetary model with flexible supply of labor, cash in advance constraints and government spending financed by seignorage. This model has two regimes. One regime is conventional with two steady states. The other regime has a unique steady state which can be determinate or...
Persistent link: https://www.econbiz.de/10010315471
Earlier studies of the seigniorage inflation model have found that the high-inflation steady state is not stable under adaptive learning. We reconsider this issue and analyze the full set of solutions for the linearized model. Our main focus is on stationary hyperinflationary paths near the...
Persistent link: https://www.econbiz.de/10010315727
remains indeterminacy indexed by an arbitrary probability measure over the set of states of the world. With an interest rate … policy, and only if the asset market is complete, indeterminacy is nominal: it affects prices, but not the allocation of … resources at equilibrium; with a money-supply policy, the indeterminacy is real. Portfolio policy sets the portfolio of assets …
Persistent link: https://www.econbiz.de/10010318888
Using an efficiency-wage model, we examine the relationship between indeterminacy and unemployment insurance. It is … indeterminacy. Our result is based on the fact that the no-shirking condition with marginal utility ofw ealth kept constant is …
Persistent link: https://www.econbiz.de/10010318962
In this paper we consider a deterministic complete information two groups contest where the effort choices made by the teammates are aggregated into group performance by the weakest-link technology (perfect complementarity), that is a "max-min group contest", as defined by Chowdhury et al....
Persistent link: https://www.econbiz.de/10014577270