The RPEs of RBCs and other DSGEs

David Evans*, George W. Evans, Bruce McGough

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review


    In a broad class of non-linear representative agent models, represented by a system of difference equations, we replace rational expectations with linear forecast models conditioning on a predetermined set of regressors. Within this framework, a restricted perceptions equilibrium (RPE) corresponds to a forecast rule that is optimal within that class of models. Local uniqueness of a stationary rational expectations equilibrium (REE) near the non-stochastic steady state is shown to guarantee the existence, uniqueness and E-stability of an RPE local to that steady state. A benchmark RBC model with government spending shocks illustrates the theoretical results.
    Original languageEnglish
    Article number104492
    JournalJournal of Economic Dynamics and Control
    VolumeIn Press
    Early online date10 Jul 2022
    Publication statusE-pub ahead of print - 10 Jul 2022


    • Real business cycle model
    • Adaptive learning
    • E-stability
    • Restricted perceptions


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