Evans, George W.

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https://hdl.handle.net/1794/3690

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Browsing Evans, George W. by Subject "Deflation (Finance)"

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    Adaptive Expectations, Underparameterization and the Lucas Critique
    (University of Oregon, Dept. of Economics, 2001-11-29) Evans, George W., 1949-; Ramey, Garey
    A striking implication of the replacement of adaptive expectations by Rational Expectations was the "Lucas Critique," which showed that expectation parameters, and endogenous variable dynamics, depend on policy parameters. We consider this issue from the vantage point of a bounded rationality, where for transparency we model bounded rationality by means of simple adaptive expectations.We show that for a range of processes, monetary policy remains subject to the Lucas critique. However, there are also regimes in which the expectation parameter is locally invariant and the Lucas critique does not apply.
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    Are Stationary Hyperinflation Paths Learnable?
    (University of Oregon, Dept of Economics, 2003-03-17) Adam, Klaus; Evans, George W., 1949-; Honkapohja, Seppo, 1951-
    Earlier studies of the seigniorage inflation model have found that the high-inflation steady state is not stable under adaptive learning. We reconsider this issue and analyze the full set of solutions for the linearized model. Our main focus is on stationary hyperinflationary paths near the high-inflation steady state. The hyperinflationary paths are stable under learning if agents can utilize contemporaneous data. However, in an economy populated by a mixture of agents, some of whom only have access to lagged data, stable inflationary paths emerge only if the proportion of agents with access to contemporaneous data is sufficiently high.
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    Friedman's Money Supply Rule versus Optimal Interest Rate Policy
    (University of Oregon, Dept of Economics, 2003-07-12) Evans, George W., 1949-; Honkapohja, Seppo, 1951-
    Using New Keynesian models, we compare Friedman's k-percent money supply rule to optimal interest rate setting, with respect to determinacy, stability under learning and optimality. First we review the recent literature: open-loop interest rate rules are subject to indeterminacy and instability problems, but a properly chosen expectations-based rule yields determinacy and stability under learning, and implements optimal policy. We show that Friedman's rule also can generate equilibria that are determinate and stable under learning. However, computing the mean quadratic welfare loss, we find for calibrated models that Friedman's rule performs poorly when compared to the optimal interest rate rule.