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Author: Seppo Honkapohja
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George W. Evans and Seppo Honkapohja
We examine local stability under learning of stationary Markov sunspot equilibria (SSEs) in a simply dynamic nonlinear model. Necessary and sufficient conditions for local convergence of a recursive learning algorithm to...Read more...
Rational expectations as the standard solution concept for dynamic economic models leaves open two fundamental questions: (1) how can RE be attained if agents do not actually begin with RE?, and (2) which RE solution wil...Read more...
We examine a recursive algorithm for learning steady states and cycles in stochastic nonlinear models. Necessary and sufficient conditions for local convergence are shown to be equivalent to easily computable expectation...Read more...
George W. Evans, Seppo Honkapohja and Thomas J. Sargent