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Adaptive learning and multiple equilibria in a natural rate monetary model with unemployment persistence
Rantala, Anssi - Suomen Pankki - 2003
This paper demonstrates that the adaptive learning approach to modelling private sector expectations can be used as an … only one of the two rational expectations equilibria is stable under least-squares learning, and that it is always the low …
Persistent link: https://www.econbiz.de/10005207142
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Learning by disinflating
Barnett, Alina; Ellison, Martin - Suomen Pankki - 2012
Disinflationary episodes are a valuable source of information for economic agents trying to learn about the economy. In this paper we are particularly interested in how policymakers can themselves learn by disinflating. The approach differs from the existing literature, which typically focuses...
Persistent link: https://www.econbiz.de/10010541306
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Monetary policy and learning in an open economy
Ellison, Martin; Sarno, Lucio; Vilmunen, Jouko - Suomen Pankki - 2004
In this paper, we examine the incentives for central bank activism and caution in a two-country open-economy model with uncertainty and learning. We find that the presence of a strategic interaction between the home and foreign central banks creates an additional motivation for caution in...
Persistent link: https://www.econbiz.de/10005423715
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Expectations, deflation traps and macroeconomic policy
Evans, George W; Honkapohja, Seppo - Suomen Pankki - 2009
paths can arise after large pessimistic shocks to expectations. For large expectation shocks that push interest rates to the …
Persistent link: https://www.econbiz.de/10008496440
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Adaptive learning and monetary policy design
Evans, George W.; Honkapohja, Seppo - Suomen Pankki - 2002
stability under private agent learning. Appropriately designed expectations based rules can yield optimal rational expectations …
Persistent link: https://www.econbiz.de/10005648862
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Performance of monetary policy with internal central bank forecasting
Honkapohja, Seppo; Mitra, Kaushik - Suomen Pankki - 2002
Recent models of monetary policy have analysed the desirability of different optimal and ad hoc interest-rate rules under the restrictive assumption that forecasts of the private sector and central bank are homogeneous. In this paper, we study from a learning perspective the implications of...
Persistent link: https://www.econbiz.de/10005648958
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Robust learning stability with operational monetary policy rules
Evans, George W; Honkapohja, Seppo - Suomen Pankki - 2007
We consider the robust stability of a rational expectations equilibrium, which we define as stability under discounted … allow for an interest-rate stabilization motive in the policy objective. The expectations-based rules proposed in Evans and …
Persistent link: https://www.econbiz.de/10005648984
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Liquidity traps and expectation dynamics: Fiscal stimulus or fiscal austerity?
Benhabib, Jess; Evans, George W.; Honkapohja, Seppo - Suomen Pankki - 2012
globally stable. Unstable deflationary paths emerge after large pessimistic shocks to expectations. For large expectation …
Persistent link: https://www.econbiz.de/10010584391
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Targeting nominal GDP or prices: Guidance and expectation dynamics
Mitra, Kaushik; Honkapohja, Seppo - Suomen Pankki - 2014
We examine global dynamics under infinite-horizon learning in New Keynesian models where monetary policy practices either pricelevel or nominal GDP targeting and compare these regimes to inflation targeting. These interest-rate rules are subject to the zero lower bound. Robustness of the three...
Persistent link: https://www.econbiz.de/10010818984
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Robust expectations and uncertain models – A robust control approach with application to the New Keynesian economy
Kilponen, Juha - Suomen Pankki - 2004
achieve robustness against incomplete information about the structure of the economy by distorting their expectations in a … particular direction. It shows how a linear rational expectations equilibrium under concern for robustness can be solved by … responses of private consumption to government expenditure shocks under robust expectations. …
Persistent link: https://www.econbiz.de/10005190778