Title

Global stability in spite of ''local instability'' with learning

Publication Type

Journal Article

Publication Date

3-2000

Abstract

We analyse learning dynamics in deterministic economies when agents generate their forecasts by performing least squares regressions on lagged values of the endogenous state variable. We establish conditions for the global convergence to the deterministic steady state of the dynamics under learning. Our global stability result is particularly relevant since the learning rules we consider are already known to produce locally divergent behaviour around the steady state.

Keywords

least squares learning, global stability, local instability

Discipline

Economic Theory

Research Areas

Economic Theory

Publication

Journal of Mathematical Economics

Volume

33

Issue

2

First Page

155

Last Page

165

ISSN

0304-4068

Identifier

10.1016/S0304-4068(99)00021-X

Publisher

Elsevier

Additional URL

http://dx.doi.org/10.1016/S0304-4068(99)00021-X

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