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arXiv · 1407.6222

A finite set of equilibria for the indeterminacy of linear rational expectations models

Jean-Bernard Chatelain·Kirsten Ralf
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Abstract

This paper demonstrates the existence of a finite set of equilibria in the case of the indeterminacy of linear rational expectations models. The number of equilibria corresponds to the number of ways to select n eigenvectors among a larger set of eigenvectors related to stable eigenvalues. A finite set of equilibria is a substitute to continuous (uncountable) sets of sunspots equilibria, when the number of independent eigenvectors for each stable eigenvalue is equal to one.

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Jean-Bernard Chatelain, Kirsten Ralf. 2014-07-23. A finite set of equilibria for the indeterminacy of linear rational expectations models. https://arxiv.org/abs/1407.6222

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