Stability of cycles and expectations

DOI10.1016/0022-0531(86)90012-8MaRDI QIDQ1111912zbMATH OpenOpenAlexFDO

Authors Jean-Michel Grandmont, Guy Laroque

Publication date 1986

Published in Journal of Economic Theory (Search for Journal in Brave)

Full work available at URL http://www.cepremap.fr/depot/couv_orange/co8519.pdf

zbMATH Keywords

cycledynamicsexpectations functionsfictitious backward perfect foresight dynamicsperfect foresight

Mathematics Subject Classification ID

Economic growth models (91B62)

Review text

The actual dynamics of an economy depends on how agents forecast the future at every date as a function of their information on the past, while possibly learning the structure of their environment. We show in the case of a one-dimensional state variable that under mild conditions on expectations functions, a given cycle with perfect foresight that is stable in the actual dynamics is stable in a fictitious backward perfect foresight dynamics. We exhibit a restricted class of expectations functions for which the converse is true.

Recommendations

• The dynamics of expectations
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• scientific article; zbMATH DE number 19468

Cites work

• Dynamics of expectations in temporary general equilibrium theory
• Formation of expectations. A model in temporary general equilibrium theory
• Is error learning behaviour stabilizing?
• On Endogenous Competitive Business Cycles
• Rational Choice and Erratic Behaviour
• Symmetry and continuity properties of Lindahl equilibria

Cited in

(16)

• Equilibrium cycles in an overlapping generations economy with production
• Endogenous fluctuations in a bounded rationality economy: learning non-perfect foresight equilibria
• Semi-stability and heights of cycles
• Some reflections on past and future of nonlinear dynamics in economics and finance
• Expectational diversity in monetary economies
• Heterogeneous beliefs and the non-linear cobweb model
• A family production overlapping generations economy
• The dynamics of expectations
• EXPECTATIONS, FORECASTING, AND PERFECT FORESIGHT
• Recoverability and Expectations-Driven Fluctuations
• Learning and the saddle point property
• Theoretical tests of the rational expectations hypothesis in economic dynamical models
• Determinacy and stability under learning of rational expectations equilibria
• Learning with bounded memory in stochastic models
• Subjective temporary equilibrium
• Eductive expectations coordination on deterministic cycles in an economy with heterogeneous agents

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