Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
986731 | Review of Economic Dynamics | 2006 | 26 Pages |
Abstract
An economy exhibits structural heterogeneity when the forecasts of different agents have different effects on the determination of aggregate variables. We study the important case of economies in which agents' behavior depends on forecasts of aggregate variables and show how different forms of heterogeneity in structure, forecasts, and adaptive learning rules affect the conditions for convergence of adaptive learning towards rational expectations equilibrium. Results are applied to an overlapping generations model and a New Keynesian model of monetary policy.
Keywords
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Seppo Honkapohja, Kaushik Mitra,