Paper #413

Title:

Adaptive learning in models with lagged variables

Author:

Wilfredo Leiva

Date:

October 1999

Abstract:

In this work I study the stability of the dynamics generated by adaptive learning processes in intertemporal economies with lagged variables. I prove that determinacy of the steady state is a necessary condition for the convergence of the learning dynamics and I show that the reciprocal is not true characterizing the economies where convergence holds. In the case of existence of cycles I show that there is not, in general, a relationship between determinacy and convergence of the learning process to the cycle. I also analyze the expectational stability of these equilibria.

Keywords:

Intertemporal equilibrium, models with lagged variables, adaptive learning processes, expectational stability

JEL codes:

C62, E37

Area of Research:

Statistics, Econometrics and Quantitative Methods

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