Endogenous fluctuations in a bounded rationality economy: Learning non-perfect foresight equilibria

We study forward-looking economic models assuming that agents take one step ahead expectations looking back k time periods. We show that the dynamics of the economy with such an expectation Function are characterized by the c oexistence of perfect foresight and nonperfect foresight cycles. The stabil ity of all these periodic solutions under bounded rationality is related to the stability of the perfect foresight cycles. Journal of Economic Literat ure Classification Numbers: C62, D83, D84; E31, E32. (C) 1999 Academic Pres s.