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Stability Of Equilibria Under Genetic-Algorithm Adaptation: An Analysis

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  • Arifovic, Jasmina

Abstract

The stability of stationary equilibria under genetic-algorithm adaptation is studied in an overlapping-generations economy with a unique, monetary steady-state and two-period cyclic equilibria. Agents use the genetic algorithm to update their labor-supply decisions. The results of simulations and the analysis of the dynamics show that the two-period cycle is stable and that the steady-state equilibrium is unstable under genetic-algorithm adaptation. The dynamics are driven primarily by the wealth and substitution effects that lead to the algorithm's convergence to the two-period cycle.

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  • Arifovic, Jasmina, 1998. "Stability Of Equilibria Under Genetic-Algorithm Adaptation: An Analysis," Macroeconomic Dynamics, Cambridge University Press, vol. 2(1), pages 1-21, March.
    • Handle: RePEc:cup:macdyn:v:2:y:1998:i:01:p:1-21_00
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    Cited by:

    1. Seppo Honkapohja & Kaushik Mitra, 2006. "Learning Stability in Economies with Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(2), pages 284-309, April.
    2. Arifovic, Jasmina, 2001. "Evolutionary dynamics of currency substitution," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 395-417, March.
    3. Arifovic, Jasmina & Gencay, Ramazan, 2000. "Statistical properties of genetic learning in a model of exchange rate," Journal of Economic Dynamics and Control, Elsevier, vol. 24(5-7), pages 981-1005, June.
    4. Chryssi Giannitsarou, 2003. "Heterogeneous Learning," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(4), pages 885-906, October.
    5. Orlando Gomes, 2004. "Optimal Monetary Policy under Heterogeneous Expectations," Macroeconomics 0409023, University Library of Munich, Germany.

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