LEARNING EQUILIBRIA

Complicated equilibrium trajectories under least squared learning are shown to exist in a standard version of the overlapping generations model. These trajectories exist when the locally unique perfect foresight equilibrium is the monetary steady state, and thus are induced by the introduction of learning alone. This research confirms the intuition of some previous authors, who have suggested that stationary equilibrium trajectories under learning may differ from those under rational expectations. (C) 1994 Academic Press, Inc.