Equilibrium models displaying endogenous fluctuations and chaos: A survey

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Abstract

This paper surveys current developments in dynamic general equilibrium theory concerned with conditions under which endogenous fluctuations are possible. Existing contributions are divided into two classes: the larger one consists of models with a unique perfect-foresight equilibrium, while the second includes models where equilibrium is indeterminate and the set of equilibria involving endogenous fluctuations includes ‘sunspots equilibria’. While the two classes of models involve oscillations of different natures and with different policy implications, we show that both are consistent with optimizing behavior and competitive equilibrium.

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  • Cited by (0)

    This research was partially supported by a UCLA Academic Senate Grant and a grant from the NSF. The final version was materially written during the summer of 1989 while both authors were visiting the Santa Fe Institute, in Sante Fe, New Mexico, and we would like to thank the SFI for both financial and intellectual support.

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