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Notes on Agents¡¯ Behavioral Rules Under Adaptive Learning and Studies of Monetary Policy
Honkapohja, Seppo; Mitra, Kaushik; Evans, George W. - Centre for Dynamic Macroeconomic Analysis, University … - 2011
These notes try to clarify some discussions on the formulation of individual intertemporal behavior under adaptive learning in representative agent models. First, we discuss two suggested approaches and related issues in the context of a simple consumption-saving model. Second, we show that the...
Persistent link: https://www.econbiz.de/10008800438
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The Stagnation Regime of the New Keynesian Model and Current US Policy
Evans, George W. - Centre for Dynamic Macroeconomic Analysis, University … - 2011
In Evans, Guse, and Honkapohja (2008) the intended steady state is locally but not globally stable under adaptive learning, and unstable deflationary paths can arise after large pessimistic shocks to expectations. In the current paper a modified model is presented that includes a locally stable...
Persistent link: https://www.econbiz.de/10008800440
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Learning and Macroeconomics
Evans, George W.; Honkapohja, Seppo - In: Annual Review of Economics 1 (2009) 1, pp. 421-451
Expectations play a central role in modern macroeconomic theories. The econometric learning approach models economic agents as forming expectations by estimating and updating forecasting models in real time. The learning approach provides a stability test for rational expectations and a...
Persistent link: https://www.econbiz.de/10008765250
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The Stagnation Regime of the New Keynesian Model and Current US Policy
Evans, George W. - Department of Economics, University of Oregon - 2010
In Evans, Guse, and Honkapohja (2008) the intended steady state is locally but not globally stable under adaptive learning, and unstable deflationary paths can arise after large pessimistic shocks to expectations. In the current paper a modified model is presented that includes a locally stable...
Persistent link: https://www.econbiz.de/10008692929
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Expectations, Deflation Traps and Macroeconomic Policy
Evans, George W.; Honkapohja, Seppo - Department of Economics, University of Oregon - 2010
We examine global economic dynamics under infinite-horizon learning in a New Keynesian model in which the interest-rate rule is subject to the zero lower bound. As in Evans, Guse and Honkapohja (2008), we find that under normal monetary and fiscal policy the intended steady state is locally but...
Persistent link: https://www.econbiz.de/10008692933
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Policy Interaction, Expectations and the Liquidity Trap
Evans, George W.; Honkapohja, Seppo - 2014
In this paper we consider inflation and government debt dynamics when monetary policy employs a global interest rate … interest rate rules are known to imply the existence of a second, low inflation steady state, below the target inflation rate … this low inflation steady state and is driven to an even lower inflation floor which, in turn, is supported by a switch to …
Persistent link: https://www.econbiz.de/10014048589
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A Model of Near-Rational Exuberance
Bullard, James B.; Evans, George W.; Honkapohja, Seppo - 2008
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/10014052421
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Monetary Policy, Judgment and Near-Rational Exuberance
Bullard, James B.; Evans, George W.; Honkapohja, Seppo - 2007
We study how the use of judgment or "add-factors" in macroeconomic forecasting may disturb the set of equilibrium outcomes when agents learn using recursive methods. We examine the possibility of a new phenomenon, which we call exuberance equilibria, in the New Keynesian monetary policy...
Persistent link: https://www.econbiz.de/10014052422
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Expectations and the Stability Problem for Optimal Monetary Policies
Evans, George W.; Honkapohja, Seppo - 2002
A fundamentals based monetary policy rule, which would be the optimal monetary policy without commitment when private agents have perfectly rational expectations, is unstable if in fact these agents follow standard adaptive learning rules. This problem can be overcome if private expectations are...
Persistent link: https://www.econbiz.de/10014114944
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Expectations and the Stability Problem for Optimal Monetary Policies
Evans, George W.; Honkapohja, Seppo - 2003
A fundamentals based monetary policy rule, which would be the optimal monetary policy without commitment when private agents have perfectly rational expectations, is unstable if in fact these agents follow standard adaptive learning rules. This problem can be overcome if private expectations are...
Persistent link: https://www.econbiz.de/10014075826