A finite set of equilibria for the indeterminacy of linear rational expectations models
Economics
2014-07-24 v1
Abstract
This paper demonstrates the existence of a finite set of equilibria in the case of the indeterminacy of linear rational expectations models. The number of equilibria corresponds to the number of ways to select n eigenvectors among a larger set of eigenvectors related to stable eigenvalues. A finite set of equilibria is a substitute to continuous (uncountable) sets of sunspots equilibria, when the number of independent eigenvectors for each stable eigenvalue is equal to one.
Keywords
Cite
@article{arxiv.1407.6222,
title = {A finite set of equilibria for the indeterminacy of linear rational expectations models},
author = {Jean-Bernard Chatelain and Kirsten Ralf},
journal= {arXiv preprint arXiv:1407.6222},
year = {2014}
}