Random perturbations of deterministic equilibria

Article Abstract:

A study is done on small random deviation from a non-random policy process that may destabilize the equilibrium exchange rate focusing on exchange rate dynamics when a target zone is maintained or the unanticipated deviations from a policy rule is made by the government. Large deviations from the policy rule exchange rates are not created by small random shocks with rational expectations.

Economic Programs, Administration of Economic Programs, Economic policy, Rational expectations (Economics)

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A geometric approach to sunspot equilibria

Article Abstract:

A first order sunspot equilibra in a class of nonlinear dynamic economic models without predetermined variables is analysed. It is shown that such stochastic equilibria exist around a steady state whenever it is locally indeterminate.

Geometry

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On the consistency of stationary Markov equilibria with an exogenous distribution

Article Abstract:

A technique to show the existence of stationary Markov equilibria is provided. The consistency of a stationary Markov equilibria with an exogenous distribution is discussed.

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