Adaptive Learning and Monetary Policy Design

Show full item record

Title: Adaptive Learning and Monetary Policy Design
Author: Evans, George W., 1949-; Honkapohja, Seppo, 1951-
Abstract: We review the recent work on interest rate setting, which emphasizes the desirability of designing policy to ensure stability under private agent learning. Appropriately designed expectations based rules can yield optimal rational expectations equilibria that are both determinate and stable under learning. Some simple instrument rules and approximate targeting rules also have these desirable properties. We take up various complications in implementing optimal policy, including the observability of key variables and the required knowledge of structural parameters. An additional issue that we take up concerns the implications of expectation shocks not arising from transitional learning effects.
Date: 2002-11-08

Files in this item

Files Size Format View
2002-18.pdf 440Kb PDF View/Open

This item appears in the following Collection(s)

Show full item record