Existence, Stability and Computation of Stationary Distributions: An Extension of the Hopenhayn-Prescott Theorem
This paper strengthens the Hopenhayn and Prescott stability theorem for monotone economies. We extend the theorem to a larger class of applications, and develop new perspectives on the nature and causes of stability and instability. In addition, we show that models satisfying the Hopenhayn-Prescott theorem are ergodic, in the sense that sample averages of time series converge with probability one to their corresponding expectations under the stationary distribution, independent of initial conditions.
Stability, simulation, stationary equilibria
RIEB, Kobe University
Rokkodai-cho, Nada-ku, Kobe
Research School of Economics, Australian National University