RATIONAL RANDOM-WALKS

The paper examines, within the framework of a multi-dimensional one-st ep forward-looking model, a special category of rational expectations equilibria. Their support is infinite with two accumulation points (st eady states); the stochastic motion of the system is of random-walk ty pe. A general strategy for an existence proof-associated with the stud y of a dynamical system-stresses necessary conditions. In a simple ove rlapping-generations model, the proof is made complete-no backwards be nding labour supply is required in the pure sunspot case. By continuit y, heteroclinic random walk equilibria are also shown to exist when sh ocks are real.