Mele, Antonio; Molnar, Krisztina; Santoro, Sergio - Institutt for samfunnsøkonomi, Norges Handelshøyskole … - 2014
We show that price level stabilization is not optimal in an economy where agents have incomplete knowledge about the policy implemented and try to learn it. A systematically more accommodative policy than what agents expect generates short term gains without triggering an abrupt loss of confi...