Expectations and the Stability Problem for Optimal Monetary Policies

dc.contributor.authorEvans, George W., 1949-
dc.contributor.authorHonkapohja, Seppo, 1951-
dc.date.accessioned2003-08-12T23:26:42Z
dc.date.available2003-08-12T23:26:42Z
dc.date.issued2001-08-03
dc.description.abstractA fundamentals based monetary policy rule, which would be the optimal monetary policy without commitment when private agents have perfectly rational expectations, is unstable if in fact these agents follow standard adaptive learning rules. This problem can be overcome if private expectations are observed and suitable incorporated into the policy maker's optimal rule. These strong results extend to the case in which there is simultaneous learning by the policy maker and the private agents. Our findings show the importance of conditioning policy appropriately, not just on fundamentals, but also directly on observed household and firm expectations.en
dc.format.extent0 bytes
dc.format.mimetypeapplication/pdf
dc.identifier.urihttps://hdl.handle.net/1794/73
dc.language.isoen_US
dc.publisherUniversity of Oregon, Dept. of Economicsen
dc.relation.ispartofseriesUniversity of Oregon Economics Department Working Papers;2001-6
dc.subjectMacroeconomicsen
dc.subjectMonetary policy (Targets, instruments, and effects)en
dc.subjectMathematical and quantitative methodsen
dc.subjectInformation and uncertaintyen
dc.titleExpectations and the Stability Problem for Optimal Monetary Policiesen
dc.typeWorking Paperen

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