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- Title
MULTIPLE STABLE EQUILIBRIA IN AN OPTIMIZING PERFECT-FORESIGHT MODEL.
- Authors
Obstfeld, Maurice
- Abstract
The article demonstrates the possibility of multiple convergent equilibrium paths in a modified version of Brock's infinite-horizon, monetary optimizing model. The indeterminary of equilibrium is applicable to the nominal price level as well as to the real price of productive nonmonetary assets. The model features identical households which maximize the discounted sum of future instantaneous utilities over an infinite planning horizon. It is based on individual utility maximization and yields some economic insight into the cause of the multiplicity of stable equilibria.
- Subjects
ECONOMIC equilibrium; MATHEMATICAL optimization; PRICE levels; UTILITY functions; CONSUMPTION (Economics); OPPORTUNITY costs; HOUSEHOLDS; ECONOMETRIC models; MATHEMATICAL models; ECONOMETRICS
- Publication
Econometrica, 1984, Vol 52, Issue 1, p223
- ISSN
0012-9682
- Publication type
Article
- DOI
10.2307/1911471