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Local Sunspot Equilibria Reconsidered

✍ Scribed by Julio Dávila; Piero Gottardi; Atsushi Kajii


Book ID
105866597
Publisher
Springer
Year
2006
Tongue
English
Weight
638 KB
Volume
31
Category
Article
ISSN
0938-2259

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We provide a computationally simple method of analyzing the e ects of fundamental and sunspot shocks in linear rational expectations models when the equilibrium is indeterminate. Under indeterminacy sunspots can a ect model dynamics through endogenous forecast errors. Moreover, the e ect of fundamen