Jim: I think that RATEX is important precisely because it is a potent generator of multiple equilibria, given that the world we're trying to model is evidently a world characterized by such multiplicity. The early proponents of RATEX - Lucas, Sargent, Wallace and such - suppressed this part of the ratex message by ruling out, in the footnotes, any examination of the "non-fundamental" solutions. But the work of people like Azariadis, Farmer and Karl Shell, on "sunspot" equilibria soon put this aspect of RATEX front and center. Sargent in fact at one point, alarmed at the bubble possibilities in RATEX models of infinitely-lived asset markets, reverted to models of adaptive learning to insure uniqueness.
Kevin Quinn _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
