Abstract

Adaptive Learning algorithm in the spirit of Evans and Honkapohja 2001 is introduced into the monetary Lagos Wright 2005 model to study the value of cryptocurrency and its price volatility. My main results are under rational expectation (perfect foresight), neither the monetary steady state nor the autarky steady state is robustly stable, but it depends on the properties of the set up. Furthermore, with a high learning gain in a simple adaptive learning algorithm, chaotic cycles, bifurcation, bubbles, or sunspots can be generated.

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Details

Presentation Type

Paper Presentation in a Themed Session

Theme

Economy and Trade

KEYWORDS

Cryptocurrency, Money Search, Adaptive Learning

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