Comparative Statics by Adaptive Dynamics and The Correspondence Principle,” Working Paper No (2000) [5 citations — 4 self]

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by Federico Echenique, I Also Thank Robert Anderson, Juan Dubra, Néstor G, López Córdova, Marcelo Moreira, Charles Pugh, Matthew Rabin, Tarun Sabarwal, Miguel Villas-boas

A TEST FOR MONOTONE COMPARATIVE STATICS 43

http://www.haas.berkeley.edu/groups/iber/wps/econ/E00-273.pdf

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@TECHREPORT{Echenique00comparativestatics,
    author = {Federico Echenique and I Also Thank Robert Anderson and Juan Dubra and Néstor G and López Córdova and Marcelo Moreira and Charles Pugh and Matthew Rabin and Tarun Sabarwal and Miguel Villas-boas},
    title = {Comparative Statics by Adaptive Dynamics and The Correspondence Principle,” Working Paper No},
    institution = {A TEST FOR MONOTONE COMPARATIVE STATICS 43},
    year = {2000}
}

Abstract:

This paper formalizes the relation between comparative statics and the out-of-equilibrium explanation for how a system evolves after a change in parameters. The paper has two main results. First, an increase in an exogenous parameter sets off learning dynamics that involve larger values of the endogenous variables. Second, equilibrium selections that are not monotone increasing in the exogenous variables must be predicting unstable equilibria. Moreover, under some conditions monotone comparative statics and stability are equivalent. JEL Classification: C61, C62, C72, C73

Citations

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