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Information lag and dynamic stability

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  • Huang, Weihong

Abstract

The role of information in economic dynamics is examined. A misconception that the removal of uncertainty always brings additional stability to an existing equilibrium is clarified. It is shown that the relation between information and equilibrium stability is not monotonic. Removing information lag may be either beneficial or detrimental to the stability of an economic equilibrium. Although the focus is on two-dimensional economic system where economically plausible possibilities are studied in theory and numerically illustrated, the conclusions have general implications to any multi-dimensional system.

Suggested Citation

  • Huang, Weihong, 2008. "Information lag and dynamic stability," Journal of Mathematical Economics, Elsevier, vol. 44(5-6), pages 513-529, April.
    • Handle: RePEc:eee:mateco:v:44:y:2008:i:5-6:p:513-529
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    References listed on IDEAS

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    Cited by:

    1. Liliana Harding & Mihaela Neamţu, 2018. "A Dynamic Model of Unemployment with Migration and Delayed Policy Intervention," Computational Economics, Springer;Society for Computational Economics, vol. 51(3), pages 427-462, March.
    2. Sarah Mignot & Fabio Tramontana & Frank Westerhoff, 2024. "Complex dynamics in a nonlinear duopoly model with heuristic expectation formation and learning behavior," Annals of Operations Research, Springer, vol. 337(3), pages 809-834, June.
    3. Karafyllis, Iasson & Jiang, Zhong-Ping & Athanasiou, George, 2010. "Nash Equilibrium and Robust Stability in Dynamic Games: A Small-Gain Perspective," MPRA Paper 26890, University Library of Munich, Germany, revised 23 Sep 2010.
    4. Iijima, Ryota, 2011. "Heterogeneous information lags and evolutionary stability," Mathematical Social Sciences, Elsevier, vol. 61(2), pages 83-85, March.

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