Econometrica: Mar 1981, Volume 49, Issue 2

The Stability of Steady States in Perfect Foresight Models

https://doi.org/0012-9682(198103)49:2<319:TSOSSI>2.0.CO;2-I
p. 319-333

John P. Laitner

This paper analyzes nonlinear growth models in which agents' expectations have a role in determining present behavior. Assuming agents have perfect foresight, we develop sufficiency conditions for the local stability of a given steady state. We then briefly discuss several examples in which stability prevails.
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