English, Article, Journal or magazine article edition: Heterogeneous adaptive expectations and cobweb phenomena Domenico Colucci; Vincenzo Valori

User activity

Share to:
 
Bookmark: http://trove.nla.gov.au/version/168784
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Heterogeneous adaptive expectations and cobweb phenomena
Author
  • Domenico Colucci
  • Vincenzo Valori
Physical Description
  • preprint
Notes
  • We study a cobweb-type commodity market where n firms operate and characterised by a strictly monotone demand and supply. The firms are assumed to differ in a key parameter governing price expectations which we suppose to be adaptive. We characterise the unique steady state of the resulting economic dynamics in terms of stability and we study the impact of the number and diversity of firms: to this end we introduce the notions of structural and behavioural degree of instability which prove to be crucial in determining whether stability or instability prevail. We also consider the case of market merging and establish conditions to have stability (or instability) in the aggregated market in terms of the original (structural and behavioural) degrees of instability. We take up the issue of transitional dynamics and speed of convergence when the system is stable and characterise parametric configurations that maximise the speed of convergence. Motivated by the difficulty to actually observe expectations, whereas it is easier to measure some structural features of a given market, such as the relevant demand and supply price elasticities, we take the perspective of an observer (e.g. a policy maker) whose information set includes the structural but not the behavioural degree of instability. We therefore assume the firms - via the parameter which defines their expectations - are sampled independently from a population described by a given probability distribution. In this case the structural degree of instability determines how the number of potentially different firms affects the probability of ending up with a stable outcome. Analytical results are provided alongside numerical evidence.
  • heterogeneous agents, expectations, stability of steady states, market merging, speed of convergence
  • RePEc:flo:wpaper:200901
Language
  • English
Contributed by
OAIster

Get this edition

Other links

  • Set up My libraries

    How do I set up "My libraries"?

    In order to set up a list of libraries that you have access to, you must first login or sign up. Then set up a personal list of libraries from your profile page by clicking on your user name at the top right of any screen.

  • All (1)
  • Unknown (1)
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.

User activity


e.g. test cricket, Perth (WA), "Parkes, Henry"

Separate different tags with a comma. To include a comma in your tag, surround the tag with double quotes.

Be the first to add a tag for this edition

Be the first to add this to a list

Comments and reviews

What are comments? Add a comment

No user comments or reviews for this version

Add a comment