Econometrica: Apr 1958, Volume 26, Issue 2
A Note on Expectations and Stability
https://doi.org/0012-9682(195804)26:2<297:ANOEAS>2.0.CO;2-C
p.
297-305
Kenneth J. Arrow, Marc Nerlove
Demand and supply depend in general not only on current prices but also on expectations. If it is assumed that expectations are formed from past prices in the adaptive way suggested by Cagan and others, it is shown that under certain circumstances the resulting system of multiple markets has dynamic stability.Log In To View Full Content