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monetary policy framework. Inclusion of judgement in forecasts can lead to self-fulfilling fluctuations, but without the …
Persistent link: https://www.econbiz.de/10005707643
We study how the use of judgment or "add-factors" in forecasting may disturb the set of equilibrium outcomes when agents learn using recursive methods. We isolate conditions under which new phenomena, which we call exuberance equilibria, can exist in a standard self-referential environment....
Persistent link: https://www.econbiz.de/10005352864
-fulfilling fluctuations in a subset of the determinacy region. We study how policymakers can minimize the risk of exuberance equilibria. …
Persistent link: https://www.econbiz.de/10005352949