Rational Expectations Business Cycles in Search Equilibrium
Year: 1989
Type: article
Abstract: We examine the rational expectations equilibrium paths of the model of search and barter in Diamond's "Aggregate Demand Management in Search Equilibrium." For some initial positions, there are two equilibrium paths converging to different steady states, with the high-activity path Pareto-dominating the low-activity path. With some parameters there is also a continuum of equilibrium paths converging to another steady state. Moreover, there can be cycles that are equilibrium paths, even though the environment is stationary.
Source: Journal of Political Economy
DOI: 10.1086/261618
Authors: Peter Diamond, Drew Fudenberg
Language: English
Topic: Economic theories and models
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2093594083