Browsing Evans, George W. by Title
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Does Ricardian Equivalence Hold When Expectations are not Rational?
(University of Oregon, Dept of Economics, 20100804)This paper considers the Ricardian Equivalence proposition when expectations are not rational and are instead formed using adaptive learning rules. We show that Ricardian Equivalence continues to hold provided suitable ... 
The ECorrespondence Principle
(University of Oregon, Dept of Economics, 20030623)We introduce the Ecorrespondence principle for stochastic dynamic expectations models as a tool for comparative dynamics analysis. The principle is applicable to equilibria that are stable under least squares and closely ... 
Existence of Adaptively Stable Sunspot Equilibria near an Indeterminate Steady State
(University of Oregon, Dept. of Economics, 20020406)We examine the nonlinear model x_t = E_t F(x_(t+1)). Markov SSEs exist near an indeterminate steady state, hat(x)=F(hat(x)), provided F'(hat(x) > 1. Despite the importance of indeterminancy in macroeconomics, earlier ... 
Expectational Stability of Stationary Sunspot Equilibria in a Forwardlooking Linear Model
(University of Oregon, Dept. of Economics, 20020114)We consider the stability under adaptive learning of the complete set of solutions to the model x_i=beta(Ei*)(x_i+1) when beat >1. In addition to the fundamentals solution, the literature describes both finitestate ... 
Expectations and the Stability Problem for Optimal Monetary Policies
(University of Oregon, Dept. of Economics, 20010803)A 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 ... 
Expectations, Deflation Traps and Macroeconomic Policy
(University of Oregon, Dept of Economics, 20090706)We examine global economic dynamics under infinitehorizon learning in a New Keynesian model in which the interestrate rule is subject to the zero lower bound. As in Evans, Guse and Honkapohja (2008), we find that under ... 
Friedman's Money Supply Rule versus Optimal Interest Rate Policy
(University of Oregon, Dept of Economics, 20030712)Using New Keynesian models, we compare Friedman's kpercent money supply rule to optimal interest rate setting, with respect to determinacy, stability under learning and optimality. First we review the recent literature: ... 
Generalized Stochastic Gradient Learning
(University of Oregon, Dept of Economics, 20050919)We study the properties of generalized stochastic gradient (GSG) learning in forwardlooking models. We examine how the conditions for stability of standard stochastic gradient (SG) learning both differ from and are related ... 
Implementing Optimal Monetary Policy in NewKeynesian Models with Inertia
(University of Oregon, Dept of Economics, 20060603)We consider optimal monetary policy in New Keynesian models with inertia. First order conditions, which we call the MJBalternative, are found to improve upon the timeless perspective. The MJBalternative is shown to be ... 
Indeterminacy and the Stability Puzzle in NonConvex Economies
(University of Oregon, Dept. of Economics, 20020725)We extend common factor analysis to a multidimensional setting by considering a bivariate reduced form consistent with many Real Business Cycle type models. We show how to obtain new representations of sunspots and find ... 
An Interview with Thomas J. Sargent
(University of Oregon, Dept of Economics, 20050111)This is the text of an interview with Thomas J. Sargent. The interview will be published in Macroeconomic Dynamics. 
Intrinsic Heterogeneity in Expectation Formation
(University of Oregon, Dept. of Economics, 20030516)We introduce the concept of a Misspecification Equilibrium to dynamic macroeconomics. Agents choose between a list of misspecified econometric models and base their selection on relative forecast performance. A Misspecification ... 
Learning about Risk and Return: A Simple Model of Bubbles and Crashes
(University of Oregon, Dept of Economics, 20080131)This paper demonstrates that an asset pricing model with leastsquares learning can lead to bubbles and crashes as endogenous responses to the fundamentals driving asset prices. When agents are riskaverse they generate ... 
Learning and Macroeconomics
(University of Oregon, Dept of Economics, 20080711)Expectations play a central role in modern macroeconomic theories. The econometric learning approach models economic agents as forming expectations by estimating and updating forecasting models in real time. The learning ... 
Liquidity Traps, Learning and Stagnation
(University of Oregon, Dept of Economics, 20070605)We examine global economic dynamics under learning in a New Keynesian model in which the interestrate rule is subject to the zero lower bound. Under normal monetary and fiscal policy, the intended steady state is locally ... 
Model Uncertainty and Endogenous Volatility
(University of Oregon, Dept of Economics, 20051018)This paper identifies two channels through which the economy can generate endogenous inflation and output volatility, an empirical regularity, by introducing model uncertainty into a Lucastype monetary model. The equilibrium ... 
Monetary Policy and Heterogeneous Expectations
(University of Oregon, Dept of Economics, 20100430)This 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 ... 
Monetary Policy and Stable Indeterminacy with Inertia
(University of Oregon, Dept. of Economics, 20040329)We examine existence and stability under learning of sunspot equilibria in a New Keynesian model incorporating inertia. Indeterminacy remains prevalent, stable sunspots abound, and inertia in IS and AS relations do not ... 
Monetary Policy, Endogenous Inattention, and the Volatility Tradeoff
(University of Oregon, Dept of Economics, 20041207)This paper addresses the outputprice volatility puzzle by studying the interaction of optimal monetary policy and agents' beliefs. We assume that agents choose their information acquisition rate by minimizing a loss ... 
Monetary Policy, Expectations and Commitment
(University of Oregon, Dept of Economics, 20050406)This is a revised and shortened version of Working Paper 200211. Commitment in monetary policy leads to equilibria that are superior to those from optimal discretionary policies. A number of interest rate reaction functions ...