ISSN:
1573-6970
Keywords:
expectations
;
bubbles
;
uniqueness
;
stability
;
state variables
;
multiplicity
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract This paper concerns the minimal-state-variable (MSV) criterion for selection among solutions in rational expectationsmodels that feature a multiplicity of paths that satisfy all of the model's conditions. It compares the MSVcriterion with others, including the widely used saddle-path (dynamic stability) criterion. It is emphasized that theMSV criterion can be viewed as a scientifically useful classification scheme that delineates the unique solutionthat is free of bubble components. In the process of demonstrating uniqueness for a broad class of linear models,the paper exposits a convenient computational procedure. Applications to current issues are outlined.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1023/A:1008746610773
