Role of the Minimal State Variable Criterion in Rational Expectat.pdf.pdf' (452.55 kB)
Download file

Role of the Minimal State Variable Criterion in Rational Expectations Models

Download (452.55 kB)
journal contribution
posted on 1969-08-01, 00:00 authored by Bennett T. McCallum
This paper concerns the minimal-state-variable (MSV) criterion for selection among solutions in rational expectations models that feature a multiplicity of paths that satisfy all of the model''s conditions. It compares the MSV criterion with others, including the widely used saddle-path (dynamic stability) criterion. It is emphasized that the MSV criterion can be viewed as a scientifically useful classification scheme that delineates the unique solution that is free of bubble components. In the process of demonstrating uniqueness for a broad class of linear models,the paper exposits a convenient computational procedure. Applications to current issues are outlined.

History

Date

1969-08-01

Usage metrics

Exports