Computing sunspot equilibria in linear r
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Thomas A. Lubik; Frank Schorfheide
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Article
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2003
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Elsevier Science
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English
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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