A note on expectations and stability

Citation
J. Arrow, Kenneth et Nerlove, Marc, A note on expectations and stability , Econometrica , 26(2), 1958, pp. 297-305
Journal title
ISSN journal
00129682
Volume
26
Issue
2
Year of publication
1958
Pages
297 - 305
Database
ACNP
SICI code
Abstract
Demand and supply depend in general not only on current prices but also on expectations. If it is assumed that expectations are formed from past prices in the adaptive way suggested by Cagan and others, it is shown that under certain circumstances the resulting system of multiple markets has dynamic stability.