Learning stability in economies with heterogeneous agents

S  Honkapohja; K  Mitra

doi:10.1016/j.red.2006.01.003

Learning stability in economies with heterogeneous agents

S Honkapohja, K Mitra

Research output: Contribution to journal › Article › peer-review

36 Citations (Scopus)

Abstract

An economy exhibits structural heterogeneity when the forecasts of different agents have different effects on the determination of aggregate variables. We study the important case of economies in which agents' behavior depends on forecasts of aggregate variables and show how different forms of heterogeneity in structure, forecasts, and adaptive learning rules affect the conditions for convergence of adaptive learning towards rational expectations equilibrium. Results are applied to an overlapping generations model and a New Keynesian model of monetary policy. (c) 2006 Elsevier Inc. All rights reserved.

Original language	English
Pages (from-to)	284-309
Number of pages	26
Journal	Review of Economic Dynamics
Volume	9
DOIs	https://doi.org/10.1016/j.red.2006.01.003
Publication status	Published - Apr 2006

Keywords

adaptive learning
expectations formation
stability of equilibrium
overlapping generations model
inflation
monetary policy
LINEAR STOCHASTIC-MODELS
MONETARY-POLICY
CONVERGENCE
EXPECTATIONS
EQUILIBRIA
COORDINATION
PERSPECTIVE
INFLATION

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10.1016/j.red.2006.01.003

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title = "Learning stability in economies with heterogeneous agents",

abstract = "An economy exhibits structural heterogeneity when the forecasts of different agents have different effects on the determination of aggregate variables. We study the important case of economies in which agents' behavior depends on forecasts of aggregate variables and show how different forms of heterogeneity in structure, forecasts, and adaptive learning rules affect the conditions for convergence of adaptive learning towards rational expectations equilibrium. Results are applied to an overlapping generations model and a New Keynesian model of monetary policy. (c) 2006 Elsevier Inc. All rights reserved.",

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author = "S Honkapohja and K Mitra",

year = "2006",

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doi = "10.1016/j.red.2006.01.003",

language = "English",

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pages = "284--309",

journal = "Review of Economic Dynamics",

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AU - Honkapohja, S

AU - Mitra, K

PY - 2006/4

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N2 - An economy exhibits structural heterogeneity when the forecasts of different agents have different effects on the determination of aggregate variables. We study the important case of economies in which agents' behavior depends on forecasts of aggregate variables and show how different forms of heterogeneity in structure, forecasts, and adaptive learning rules affect the conditions for convergence of adaptive learning towards rational expectations equilibrium. Results are applied to an overlapping generations model and a New Keynesian model of monetary policy. (c) 2006 Elsevier Inc. All rights reserved.

AB - An economy exhibits structural heterogeneity when the forecasts of different agents have different effects on the determination of aggregate variables. We study the important case of economies in which agents' behavior depends on forecasts of aggregate variables and show how different forms of heterogeneity in structure, forecasts, and adaptive learning rules affect the conditions for convergence of adaptive learning towards rational expectations equilibrium. Results are applied to an overlapping generations model and a New Keynesian model of monetary policy. (c) 2006 Elsevier Inc. All rights reserved.

KW - adaptive learning

KW - expectations formation

KW - stability of equilibrium

KW - overlapping generations model

KW - inflation

KW - monetary policy

KW - LINEAR STOCHASTIC-MODELS

KW - MONETARY-POLICY

KW - CONVERGENCE

KW - EXPECTATIONS

KW - EQUILIBRIA

KW - COORDINATION

KW - PERSPECTIVE

KW - INFLATION

UR - http://www.scopus.com/inward/record.url?scp=33645048183&partnerID=8YFLogxK

U2 - 10.1016/j.red.2006.01.003

DO - 10.1016/j.red.2006.01.003

M3 - Article

SN - 1094-2025

VL - 9

SP - 284

EP - 309

JO - Review of Economic Dynamics

JF - Review of Economic Dynamics

ER -

Learning stability in economies with heterogeneous agents

Abstract

Keywords

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