Anticipated Fiscal Policy and Adaptive Learning

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Title: Anticipated Fiscal Policy and Adaptive Learning
Author: Evans, George W., 1949-; Honkapohja, Seppo, 1951-; Mitra, Kaushik
Abstract: We consider the impact of anticipated policy changes when agents form expectations using adaptive learning rather than rational expectations. To model this we assume that agents combine limited structural knowledge with a standard adaptive learning rule. We analyze these issues using two well-known set-ups, an endowment economy and the Ramsey model. In our set-up there are important deviations from both rational expectations and purely adaptive learning. Our approach could be applied to many macroeconomic frameworks.
Description: 44 p.
Date: 2007-02-18

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