Publication Type
Journal Article
Version
publishedVersion
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
Citation
CHATTERJI, Shurojit and CHATTOPADHYAY, Subir.
Functional sunspot equilibria. (2006). Journal of Mathematical Economics. 42, (1), 22-35.
Available at: https://ink.library.smu.edu.sg/soe_research/1885
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.jmateco.2005.07.001