This paper analyzes the relationship between the expectational stability of rational expectations solutions and the possible convergence of adaptive learning processes. Both concepts are used as selection criteria in the case of multiple rational expectations solutions. Results obtained using recursive least squares lead to the conjecture that there exists a general one-to-one correspondence between these two selection criteria. On the basis of a simple linear model and a stochastic gradient algorithm as an alternative learning procedure, it is demonstrated that such a conjecture would be incorrect: There are cases in which stochastic gradient learning converges to rational expectations solutions that are not expectationally stable.

I examine the robustness of monetary equilibria in a random-matching model, where a more efficient mechanism for trade is available. Agents choose between two trading sectors: the search and the intermediated sector. In the former, trade partners arrive randomly and there is a trading externality. In the latter, a costly matching technology provides deterministic double-coincidence matches. Multiple equilibria exist with the extent of costly matching endogenously determined. Money and “mediated” trade may coexist. This depends on the size of the probability of a trade, relative to the cost of deterministic matching. This outcome is inferior for an increasing-returns externality. Under certain conditions, regimes with only costly matching are welfare superior to monetary regimes with random matching.

We examine whether annual, quarterly, and monthly U.S. aggregate consumption data could have been generated by a utility-maximizing representative agent with intertemporally separable utility. The model appears inapplicable over the full time periods covered by the NIPA data, which are the sample periods often used in the literature. The model does appear applicable, however, over long subsamples. The data also are inconsistent with separability assumptions routinely made in the literature. In particular, the main categories of consumption (nondurables, services, and durables) are not mutually separable. We consider the implications of our results for inference about consumption based on the representative-agent model.

This paper analyzes the empirical interdependecies among asset returns, real activity, and inflation from multicountry and international points of view. We find that innovations in nominal stock returns are not significantly related to inflation or real activity, that the U.S. term structure of interest rates predicts both domestic and foreign inflation rates and domestic future real activity, and that innovations in inflation do not significantly affect real activity. An interpretation of the dynamics and some policy implications of the results are provided.

This paper provides a survey of the applications of evolutionary algorithms in macroeconomic models. Discussion is organized around the issues related to stability of equilibria, equilibrium selection, transitional dynamics, and the long-run evolutionary dynamics different from rational-expectations equilibrium outcomes. The survey also discusses criteria that can be used to evaluate the performance and usefulness of evolutionary algorithms in the macroeconomic context.

This paper utilizes the concept of almost homogeneity to obtain a generalization of the elasticity of factor substitution. From this, an expression for the bias to technical change is derived that explicitly includes the individual degrees of input homogeneity. It is shown that the relative values of these homogeneity parameters can affect the magnitude and direction of the factor-saving bias to technical change. These parameters also influence the size of the residual or unexplained component of aggregate output growth.