Publication Type

Journal Article

Publication Date

2-2006

Abstract

Consider a one step forward looking model where agents believe that the equilibrium values of the state variable are determined by a function whose domain is the current value of the state variable and whose range is the value for the subsequent period. An agent's forecast for the subsequent period uses the belief, where the function that is chosen is allowed to depend on the current realization of an extrinsic random process, and is made with knowledge of the past values of the state variable but not the current value. The paper provides (and characterizes) the conditions for the existence of sunspot equilibria for the model described.

Keywords

extrinsic uncertainty, stochastic equilibria

Discipline

Economic Theory

Research Areas

Economic Theory

Publication

Journal of Mathematical Economics

Volume

42

Issue

1

First Page

22

Last Page

35

ISSN

0304-4068

Identifier

10.1016/j.jmateco.2005.07.001

Publisher

Elsevier

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://dx.doi.org/10.1016/j.jmateco.2005.07.001

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