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dc.contributor.authorEvans, George W.
dc.contributor.authorMcGough, Bruce
dc.date.accessioned2021-07-09T23:37:00Z
dc.date.available2021-07-09T23:37:00Z
dc.date.issued2020-03
dc.identifier.citationEvans , G W & McGough , B 2020 , ' Stable near-rational sunspot equilibria ' , Journal of Economic Theory , vol. 186 , 104987 . https://doi.org/10.1016/j.jet.2019.104987en
dc.identifier.issn0022-0531
dc.identifier.otherPURE: 265752099
dc.identifier.otherPURE UUID: 22ba7657-50d3-42fd-96cc-713ba6449895
dc.identifier.otherRIS: urn:6B190A7F584F7FF550F1DD9CC495C14C
dc.identifier.otherScopus: 85078141647
dc.identifier.otherWOS: 000516887000013
dc.identifier.urihttps://hdl.handle.net/10023/23510
dc.descriptionFinancial support from National Science Foundation Grant No. SES-1559209 is gratefully acknowledged.en
dc.description.abstractWe introduce a new class of solutions to nonlinear forward-looking models called near-rational sunspot equilibria (NRSE). NRSE are natural nonlinear extensions of the usual sunspot equilibria associated with the linearized version of the economy, and are near-rational in that agents use the optimal linear forecasting model when forming expectations. Generic results for existence and stability under learning are established. NRSE in indeterminate nonlinear models are found to be stable under learning provided that the corresponding linearized model's minimal state variable solution is E-stable. NRSE are readily computable, and our results make it possible to use the standard linear tools to search for stable NRSE. We illustrate our results using a canonical nonlinear New Keynesian model.
dc.format.extent33
dc.language.isoeng
dc.relation.ispartofJournal of Economic Theoryen
dc.rightsCopyright © 2019 Published by Elsevier Inc. This work has been made available online in accordance with publisher policies or with permission. Permission for further reuse of this content should be sought from the publisher or the rights holder. This is the author created accepted manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at https://doi.org/10.1016/j.jet.2019.104987en
dc.subjectE-stabilityen
dc.subjectSunspot equilibriaen
dc.subjectNonlinear dynamicsen
dc.subjectIndeterminacyen
dc.subjectMSV principleen
dc.subjectHB Economic Theoryen
dc.subjectT-NDASen
dc.subjectBDCen
dc.subjectR2Cen
dc.subject.lccHBen
dc.titleStable near-rational sunspot equilibriaen
dc.typeJournal articleen
dc.description.versionPostprinten
dc.contributor.institutionUniversity of St Andrews. School of Economics and Financeen
dc.identifier.doihttps://doi.org/10.1016/j.jet.2019.104987
dc.description.statusPeer revieweden
dc.date.embargoedUntil2021-07-10


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