A note on the stability of endogenous cycles in Diamond's model of search and barter
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In this note stability conditions for the endogenous rational expectations business cycles detected by Diamond and Fudenberg (1989) are derived. It is shown that for the trading externality underlying their example, bifurcating cycles are always stable, i.e., there always exists a continuum of rational expectations equilibrium paths converging to the cycle.
KeywordsStability Condition Economic Theory International Economic Business Cycle Rational Expectation
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