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| Author: | Foster, J. E. Frierman, M. |
| Title: | Learning rational expectations: Classical conditions ensure uniqueness and global stability. |
| Journal: | Economica
1990 : NOV, VOL. 57:228, p. 439-453 |
| Index terms: | RATIONAL EXPECTATIONS PRICES MODELS |
| Language: | eng |
| Abstract: | The possibilities for global stability of rational expectations under boundedly rational learning are explored with the focus on a specific asymmetric example of previous works /Blume, Easly, Rander/. The main results point out an intriguing relationship between stability in learning and classical conditions for uniqueness and stability of Walraisan equilibrium. It is found that gross substitutability, suitably extended to incorporate the informational rule of prices, is sufficient to ensure global stability of revealing rational expectations equilibrium under learning. The analysis is aided by a newly developed technique, which allows convenient graphical treatment of the issues surrounding rational expectations. |
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