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Some economic models like the cash-in-advance model of money have the property that the dynamical system characterizing equilibria is multi-valued going forward in time, but single-valued going backward in time, i.e., the model has backward dynamics. In this paper, we apply the theory of inverse limits to characterize topologically the set of equilibria in… (More)

Is a balanced-budget rule compatible with a government honoring its debt obligations? According to the conventional explanation, governments honor their debt obligations to maintain a good reputation for future borrowing. The ability to borrow is desirable because it allows for greater tax smoothing. However, a balanced-budget rule limits the ability to… (More)

- David R. Stockman
- J. Economic Theory
- 2010

Benhabib and Farmer (1996) explore the possibility of local indeterminacy in a two-sector model with sector-specific externalities. They find that very small sector-specific externalities are sufficient for local indeterminacy. In this case, it is possible to construct sunspot equilibria where extrinsic uncertainty matters. In this paper, I provide a global… (More)

- Judy Kennedy, Brian Raines, David R. Stockman
- 2007

In this paper, we provide a framework for calculating expected utility in models with chaotic equilibria and consequently a framework for ranking chaos. Suppose that a dynamic economic model's equilibria correspond to orbits generated by a chaotic dynamical system f : X → X where X is a compact metric space and f is continuous. The map f could represent the… (More)

Some economic models like the cash-in-advance model of money or overlapping generations model have the property that the dynamics are ill-defined going forward in time, but well-defined going backward in time. In such instances, what does it mean for an ill-defined dynamical system to be chaotic? Furthermore, under what conditions are such dynamical systems… (More)

Some economic models like the cash-in-advance model of money have the property that the dynamics are ill-defined going forward in time, but well-defined going backward in time. In this paper, we apply the theory of inverse limits to characterize topologically all possible solutions to a dynamic economic model with this property. We show that such techniques… (More)

- David R. Stockman, Brian E. Raines
- 2007

Some macroeconomic models exhibit a type of global indeterminacy known as Euler equation branching (e.g., the one-sector growth model with a production externality). The dynamics in such models are governed by a differential inclusion ˙ x ∈ F (x), where F is a set-valued function. In this paper, we show that in models with Euler equation branching there are… (More)

I extend the Atkeson and Kehoe (1999) putty-clay model to include elastic labor supply and more general forms of technology to explore the impact of oil shocks on the macroeconomy. In particular, I am interested in (1) how this extension affects their results with regard to permanent changes in the price of oil, (2) a comparison of the business cycle… (More)

- Judy Kennedy, Brian Raines, David R. Stockman

Suppose that equilibria from a dynamic economic model correspond to the backward orbits generated by a dynamical system f : X → X where X is a compact metric space and f is continuous and non-invertible, i.e., x t = f (x t+1). This type of behavior has been named backward dynamics and can occur in the cash-in-advance model of money and overlapping… (More)

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