Pierre-Andre Chiappori, Pierre-Yves Geoffard, Roger Guesnerie
The paper investigates the existence of stationary sunspot equilibria (SSE) in the vicinity of a steady state in a general, one-step forward looking economic model of dimension $n$. It is shown that, whenever the steady state is indeterminate, for the associated deterministic dynamics--i.e., there exists a continuum of perfect foresight paths converging to the steady state--then there exists a continuum of SSE of finite order in any neighborhood of the steady state. The proof relies upon bifurcation theory; it provides a characterization of the random processes for which SSE may appear and a description of the location of the support of the SSE close to the bifurcation. The results apply in particular to linear models.
MLA
Chiappori, Pierre-Andre, et al. “Sunspot Fluctuations Around a Steady State: The Case of Multidimensional One-Step Forward Looking Economic Models.” Econometrica, vol. 60, .no 5, Econometric Society, 1992, pp. 1097-1126, https://www.jstor.org/stable/2951540
Chicago
Chiappori, Pierre-Andre, Pierre-Yves Geoffard, and Roger Guesnerie. “Sunspot Fluctuations Around a Steady State: The Case of Multidimensional One-Step Forward Looking Economic Models.” Econometrica, 60, .no 5, (Econometric Society: 1992), 1097-1126. https://www.jstor.org/stable/2951540
APA
Chiappori, P.-A., Geoffard, P.-Y., & Guesnerie, R. (1992). Sunspot Fluctuations Around a Steady State: The Case of Multidimensional One-Step Forward Looking Economic Models. Econometrica, 60(5), 1097-1126. https://www.jstor.org/stable/2951540
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