THE SPECTRAL APPROACH TO LINEAR RATIONAL EXPECTATIONS MODELS
Al-Sadoon, Majid M.
This paper considers linear rational expectations models in the frequency domain. The paper characterizes existence and uniqueness of solutions to particular as well as generic systems. The set of all solutions to a given system is shown to be a finite-dimensional affine space in the frequency domain. It is demonstrated that solutions can be discontinuous with respect to the parameters of the models in the context of nonuniqueness, invalidating mainstream frequentist and Bayesian methods. The il