The Econometric SocietyEdited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262
Econometrica: Jul, 1956, Volume 24, Issue 3
https://doi.org/0012-9682(195607)24:3<288:ATOEAT>2.0.CO;2-S
p. 288-293
Alain C. Enthoven, Kenneth J. Arrow
The relationship between extrapolative expectations and dynamic stability is studied in the context of a multiple market system. Metzler's theorem on the Hicksian stability conditions is extended to include a simple expectations function. It is shown that a stable dynamic system can absorb the effects of some extrapolation of price movements and remain stable.
