A Note on Woodford′s Conjecture: Constructing Stationary Sunspot Equilibria in a Continuous Time Model

Shigoka, Tadashi

doi:10.1006/jeth.1994.1081

Cited by 24 publications

(31 citation statements)

References 7 publications

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“…2 2 See Shigoka (1994), Drugeon and Wigniolle (1996) and Nishimura and Shigoka (2006) for a different kind of sunspot equilibria in continuous time models. …”

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confidence: 99%

Bifurcation and sunspots in the continuous time equilibrium model with capacity utilization

Benhabib

Nishimura

Shigoka³

2008

Int J of Economic Theory

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In the present paper, we construct a continuous time model of economic growth with positive externalities and with variable capacity utilization, and study the global equilibrium paths in this model. If there is a homoclinic orbit or a periodic solution in this model, equilibrium is globally indeterminate. We show that positive externalities can yield multiple steady states, a one‐parameter family of homoclinic orbits, and a two‐parameter family of periodic solutions. It is also shown that there exists a sunspot equilibrium in this model.

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“…2 2 See Shigoka (1994), Drugeon and Wigniolle (1996) and Nishimura and Shigoka (2006) for a different kind of sunspot equilibria in continuous time models. …”

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confidence: 99%

Bifurcation and sunspots in the continuous time equilibrium model with capacity utilization

Benhabib

Nishimura

Shigoka³

2008

Int J of Economic Theory

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“…Consequently, inflation rate and the real exchange rates are jointly determined by the equilibrium of the model. This is derived from the sunspot equilibria theory in which Woodford (1986), Shigoka (1994) and Drugeon and Wignolle (1996) have demonstrated that macroeconomic instability is related to multiple rational expectation equilibria. This study therefore examines how inflation, through monetary policy target, impacts on relative prices and their instability, thereby impairing market signals.…”

Section: Introductionmentioning

confidence: 99%

Monetary Policy and Macroeconomic Instability in Nigeria : A Rational Expectation Approach

Folawewo

Osinubi

2006

Journal of Social Sciences

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Generally, both fiscal and monetary policies seek at achieving relative macroeconomic stability. Based on countries' experience on the role of monetary policy in controlling economics instability, this study examines the efficacy of monetary policy in controlling inflation rate and exchange rate instability. The analysis performed is based on a rational expectation framework that incorporates the fiscal role of exchange rate. Using quarterly data spanning over 1980: 1 to 2000: 4, and applying time series test on the data used, the paper shows that the effort of monetary policy at influencing the finance of government fiscal deficit through the determination of the inflationtax rate affects both the rate of inflation and the real exchange rate, thereby causing volatility in their rates. The paper reveals that inflation affects volatility of its own rate as well as in the rate of real exchange. The policy import of the paper is that monetary policy should be set in such a way that the objective it is to achieve is well defined.

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“…They simply add a 'derivative' of the process to their decision rule. 9 To justify such an approach, note that Shigoka (1994) showed the existence of the SSE of a similar form in the Benhabib and Farmer (1994) model; the sunspot variable was a continuous time Markov process with ÿnitely many states. A Wiener process is simply a continuous time Markov process with uncountably many states.…”

Section: Constructing Sdementioning

confidence: 99%

“…This connection between the indeterminacy of an REE and the existence of some SSE (known as 'Woodford's Conjecture') was established for a broad class of models. These models include discrete time OLG models, see Woodford (1986), Grandmont (1986), and Spear et al (1990); a pure capital accumulation model where production is subject to externality, see Spear (1991); a continuous-time endogenous growth model with a Poisson process as a sunspot variable in Drugeon and Wigniolle (1996); and ÿnally, a variety of continuous-time growth models, similar to the one used here, where the sunspot variable is a continuous-time Markov process with ÿnitely many states, see Shigoka (1994).…”

Section: Sunspots As a Coordinating Mechanismmentioning

confidence: 99%

Indeterminacy, sunspots, and development traps

Slobodyan

2005

Journal of Economic Dynamics and Control

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A Note on Woodford′s Conjecture: Constructing Stationary Sunspot Equilibria in a Continuous Time Model

Cited by 24 publications

References 7 publications

Bifurcation and sunspots in the continuous time equilibrium model with capacity utilization

Bifurcation and sunspots in the continuous time equilibrium model with capacity utilization

Monetary Policy and Macroeconomic Instability in Nigeria : A Rational Expectation Approach

Indeterminacy, sunspots, and development traps

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