Publication Type

Journal Article

Publication Date

12-1995

Abstract

This paper examines the stability of deterministic steady states in a class of economies where the state variable is one dimensional and where agents use Bayesian techniques to form expectations. The dynamics with learning are locally convergent if the prior mean is close to a stable perfect-foresight root having modulus less than 1 and if the prior beliefs are held with enough confidence. The dynamics are, however, divergent if the prior mean or the variance of the prior distribution is sufficiently large

Discipline

Econometrics | Economics | Economic Theory

Research Areas

Economic Theory

Publication

Journal of Economic Theory

Volume

67

Issue

2

First Page

590

Last Page

598

ISSN

0022-0531

Identifier

10.1006/jeth.1995.1088

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

https://doi.org/10.1006/jeth.1995.1088

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