Kurz, Mordecai; Motolese, Maurizio; Piccillo, Giulia; … - 2015 - This version, January 26, 2015
We study the impact of diverse beliefs on conduct of monetary policy. Individual belief is modeled by a state variable … assume a more aggressive policy will change outcomes in a predictable manner. (iii) When beliefs are diverse a central bank … stability. (vi) Belief dispersion is measured by cross sectional standard deviation of individual beliefs. An increased belief …