Learning and equilibrium selection in a monetary overlapping generations model with sticky prices
- We study adaptive learning in a monetary overlapping generations model with sticky prices and monopolistic competition for the case where learning agents observe current endogenous variables. Observability of current variables is essential for informational consistency of the learning setup with the model set up but generates multiple temporary equilibria when prices are flexible and prevents a straightforward construction of the learning dynamics. Sticky prices overcome this problem by avoiding simultaneity between prices and price expectations. Adaptive learning then robustly selects the determinate (monetary) steady state independent from the degree of imperfect competition. The indeterminate (non-monetary) steady state and non-stationary equilibria are never stable. Stability in a deterministic version of the model may differ because perfect foresight equilibria can be the limit of restricted perceptions equilibria of the stochastic economy with vanishing noise and thereby inherit different stability properties. This discontinuity at the zero variance of shocks suggests to analyze learning in stochastic models.
Verfasserangaben: | Klaus AdamORCiDGND |
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URN: | urn:nbn:de:hebis:30-10094 |
Titel des übergeordneten Werkes (Deutsch): | CFS working paper series ; 2003, 03 |
Schriftenreihe (Bandnummer): | CFS working paper series (2003, 03) |
Dokumentart: | Arbeitspapier |
Sprache: | Englisch |
Jahr der Fertigstellung: | 2003 |
Jahr der Erstveröffentlichung: | 2003 |
Veröffentlichende Institution: | Universitätsbibliothek Johann Christian Senckenberg |
Datum der Freischaltung: | 13.06.2005 |
Freies Schlagwort / Tag: | adaptive learning; sticky prices; temporary equilibrium |
Bemerkung: | Revised version published in: Review of Economic Studies, Vol 70 (4), pp. 887-908, 2003 |
HeBIS-PPN: | 20540636X |
Institute: | Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) |
DDC-Klassifikation: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
Lizenz (Deutsch): | Deutsches Urheberrecht |