A Proposal for a Selection Criterion in a Class of Dynamic Rational Expectations Models with Multiple Equilibria

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dc.contributor.authorDriskill, Robert A.
dc.date.accessioned2020-09-13T20:40:29Z
dc.date.available2020-09-13T20:40:29Z
dc.date.issued2002
dc.description.abstractThe paper argues that multiple equilibria-whether non-stationary or stationary- are a generic property of dynamic rational expectations models. In light of this, this paper proposes a selection criterion for choosing between these multiple equilibria in an important class of dynamic rational expectations models. The criterion is based on the idea that agents can be assumed to coordinate their beliefs around the limit of a finite-horizon equilibrium. For three examples examined, all of which can have multiple stationary, i.e., non-explosive, rational expectations equilibria, there is, among the multiple equilibria of an infinite-horizon model, only one that is the limit of a finite-horizon model.
dc.description.departmentEconomics
dc.identifier.urihttp://hdl.handle.net/1803/15705
dc.language.isoen_US
dc.publisherVanderbilt Universityen
dc.subject.other
dc.titleA Proposal for a Selection Criterion in a Class of Dynamic Rational Expectations Models with Multiple Equilibria
dc.typeWorking Paperen
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