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Liquidity Traps and Expectation Dynamics: Fiscal Stimulus or Fiscal Austerity?

Benhabib, Jess; Evans, George W.; Honkapohja, Seppo - Centre for Dynamic Macroeconomic Analysis, University … - 2014

We examine global dynamics under infinite-horizon learning in New Keynesian models where the interest-rate rule is subject to the zero lower bound. The intended steady state is locally but not globally stable. Unstable deflationary paths emerge after large pessimistic shocks to expectations. For...

Persistent link: https://www.econbiz.de/10010904151

Monetary policy, indeterminacy and learning

Evans, George W.; McGough, Bruce - Center for Financial Studies - 2003

both lagged and expected inflation in the Phillips Curve, and both expected inflation and inertial elements in the policy …

Persistent link: https://www.econbiz.de/10010986495

Near-rational exuberance

Bullard, James; Evans, George W.; Honkapohja, Seppo - 2005

We study how the use of judgement or “add-factors” in macroeconomic 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 standard macroeconomic...

Persistent link: https://www.econbiz.de/10011604601

Liquidity Traps, Learning and Stagnation

Evans, George W.; Guse, Eran; Honkapohja, Seppo - 2007

bound on inflation. In contrast, policies geared toward ensuring an output lower bound are insufficient for avoiding …

Persistent link: https://www.econbiz.de/10010260581

Monetary policy, indeterminacy and learning

Evans, George W.; McGough, Bruce - 2003

both lagged and expected inflation in the Phillips Curve, and both expected inflation and inertial elements in the policy …

Persistent link: https://www.econbiz.de/10010298274

Liquidity Traps, Learning and Stagnation

Evans, George W.; Guse, Eran; Honkapohja, Seppo - Department of Economics, University of Oregon - 2007

bound on inflation. In contrast, policies geared toward ensuring an output lower bound are insufficient for avoiding …

Persistent link: https://www.econbiz.de/10005763180

Policy Interaction, Expectations and the Liquidity Trap

Evans, George W.; Honkapohja, Seppo - Department of Economics, University of Oregon - 2003

We consider inflation and government debt dynamics when monetary policy employs a global interest rate rule and private … known to imply the existence of a second, low inflation steady state, below the target inflation rate. Under adaptive … learning dynamics we find the additional possibility of a liquidity trap, in which the economy slips below this low inflation …

Persistent link: https://www.econbiz.de/10005763186

Policy interaction, expectations and the liquidity trap

Evans, George W.; Honkapohja, Seppo - EconWPA - 2004

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/10005561331

Liquidity Traps, Learning and Stagnation

Evans, George W.; Guse, Eran; Honkapohja, Seppo - C.E.P.R. Discussion Papers - 2007

bound on inflation. In contrast, policies geared toward ensuring an output lower bound are insufficient for avoiding …

Persistent link: https://www.econbiz.de/10005497854

Optimal Constrained Interest-rate Rules

Evans, George W.; McGough, Bruce - Department of Economics, University of Oregon - 2005

We show that if policy-makers compute the optimal unconstrained interest-rate rule within a Taylor-type class, they may be led to rules that generate indeterminacy and/or instability under learning. This problem is compounded by uncertainty about structural parameters since an optimal rule that...

Persistent link: https://www.econbiz.de/10005593754