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dc.contributor.authorBranch, William A.
dc.contributor.authorEvans, George W., 1949-
dc.date.accessioned2011-02-10T00:18:15Z
dc.date.available2011-02-10T00:18:15Z
dc.date.issued2010-04-30
dc.identifier.urihttp://hdl.handle.net/1794/10965
dc.description25, 10 p. : ill. (some col.)en_US
dc.description.abstractThis paper studies the implications for monetary policy of heterogeneous expectations in a New Keynesian model. The assumption of rational expec- tations is replaced with parsimonious forecasting models where agents select between predictors that are underparameterized. In a Misspecification Equilibrium agents only select the best-performing statistical models. We demonstrate that, even when monetary policy rules satisfy the Taylor principle by adjusting nominal interest rates more than one for one with inflation, there may exist equilibria with Intrinsic Heterogeneity. Under certain conditions, there may exist multiple misspecification equilibria. We show that these findings have important implications for business cycle dynamics and for the design of monetary policy.en_US
dc.language.isoen_USen_US
dc.publisherUniversity of Oregon, Dept of Economicsen_US
dc.relation.ispartofseriesUniversity of Oregon Economics Department Working Papers;2010-4
dc.subjectHeterogeneous expectationsen_US
dc.subjectMonetary policyen_US
dc.subjectMultiple equilibriaen_US
dc.subjectAdaptive learningen_US
dc.titleMonetary Policy and Heterogeneous Expectationsen_US
dc.typeWorking Paperen_US


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