Publication Type
Journal Article
Version
publishedVersion
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
Citation
CHATTERJI, Shurojit.
Temporary equilibrium dynamics with bayesian learning. (1995). Journal of Economic Theory. 67, (2), 590-598.
Available at: https://ink.library.smu.edu.sg/soe_research/1956
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/10.1006/jeth.1995.1088