Eductive Stability in Sequential Exchange Economies: An Introduction

10 Pages Posted: 28 Jun 2007

See all articles by Hector F. Calvo Pardo

Hector F. Calvo Pardo

University of Southampton - Economics Division

Roger Guesnerie

École Normale Supérieure (ENS) - Department and Laboratory of Applied and Theoretical Economics (DELTA); Ludwig Maximilian University of Munich (LMU) - Center for Economic Studies (CES)

Date Written: 2004

Abstract

This paper provides a survey of results concerning eductive stability of equilibrium in an abstract 2-period exchange economy. Eductive stability is based on the Common Knowledge considerations underlying the work reported in the book Assessing rational expectations: eductive stabiltiy in economics from which this paper is a chapter. Iteratively Expectational stability is a necessary condition of eductive stability : conditions for IE stability as well as for local eductive stability are provided and discussed : these conditions stress a key role for the income effects of savings decisions as well as for their sensitivity to relative prices tomorrow.

Keywords: General Equilibrium, Rational Expectations, Common Knowledge

JEL Classification: G50, C62, D84

Suggested Citation

Calvo Pardo, Hector F. and Guesnerie, Roger, Eductive Stability in Sequential Exchange Economies: An Introduction (2004). Available at SSRN: https://ssrn.com/abstract=996447 or http://dx.doi.org/10.2139/ssrn.996447

Hector F. Calvo Pardo (Contact Author)

University of Southampton - Economics Division ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom
+442380595051 (Phone)
+442380593858 (Fax)

Roger Guesnerie

École Normale Supérieure (ENS) - Department and Laboratory of Applied and Theoretical Economics (DELTA) ( email )

48 Boulevard Jourdan
75014 Paris
France

Ludwig Maximilian University of Munich (LMU) - Center for Economic Studies (CES)

Schackstr. 4
Munich, 80539
Germany

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