Global convergence of adaptive learning in models of pure exchange |
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Authors: | Jan Wenzelburger |
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Institution: | Fakult?t für Wirtschaftswissenschaften, Universit?t Bielefeld, Postfach 100 131, 33501 Bielefeld, GERMANY (e-mail: jwenzelb@wiwi.uni-bielefeld.de), DE
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Abstract: | Summary. This paper develops an adaptive learning scheme for a standard version of the OLG model with pure exchange. Perfect forecasting
rules which generate perfect foresight orbits are approximated by cubic spline functions. These approximations are successively
constructed using historical data only. Trajectories generated by this scheme converge to perfect foresight orbits globally
for all initial conditions. This result holds for all parameterizations guaranteeing the existence of a monetary steady state
and hence is independent of consumers' savings behavior. It generalizes to all one-dimensional models of the Cobweb type.
Received: October 5, 2000; revised version: February 15, 2001 |
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Keywords: | and Phrases: Learning dynamics Rational expectations Bounded rationality |
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