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We develop a theoretical framework for studying the effects of interaction on the quaJity of decision-making by monetary policy committees. We show that interaction, i.e. increasing one's expertise through an exchange of views, is most likely not to result in interdependent voting...
Persistent link: https://www.econbiz.de/10011334835
We analyze the effects of social learning in a widely-studied monetary policy context. Social learning might be viewed … as more descriptive of actual learning behavior in complex market economies. Ideas about how best to forecast the economy … this more realistic learning dynamic. A key result from the literature in the version of the model we study is that the …
Persistent link: https://www.econbiz.de/10014052428
reunification. A policy that separates learning from control may induce a persistent upward bias in money growth and inflation, just … as observed after unification. In contrast, the optimal learning strategy which exploits the tradeoff between control and …
Persistent link: https://www.econbiz.de/10010466014
The interaction between monetary and fiscal policy and the associated uncertainty about this interaction have been put on center stage by the recent financial crisis and the associated recession. In our model agents learn about both fiscal and monetary policy rules via the Kalman Filter. In...
Persistent link: https://www.econbiz.de/10010491162
We study the impact of adaptive learning for the design of a robust monetary policy using a small open-economy New … with model misspecification. Learning induces an intertemporal trade-off for the central bank, i.e., stabilizing inflation … possibility to conduct robust monetary policy is limited in a small open economy under learning for any exchange rate pass …
Persistent link: https://www.econbiz.de/10012292350
policy rules: the assumed manner of expectations formation. Following a considerable literature on learning, it is assumed … learning dynamics converge to the equilibrium predicted by rational expectations equilibrium analysis. This question is … any of a broad class of specifications of the learning dynamics. This suggests the Taylor rule to be desirable from the …
Persistent link: https://www.econbiz.de/10013032843
We analyse a simplified New-Keynesian model with an unobserved aggregate cost-push shock in which firms and the central bank have different information about the shock. We consider a linear policy rule where a pure inflation targeting central bank decides how much to react to the shock given its...
Persistent link: https://www.econbiz.de/10013027983
We develop a theoretical framework for studying the effects of interaction on the quality of decision-making by monetary policy committees. We show that interaction, ie increasing one's expertise through an exchange of views, is most likely not to result in interdependent voting behaviour....
Persistent link: https://www.econbiz.de/10014072779
Survey data on inflation expectations show that: (i) private sector forecasts and central bank forecasts are not fully aligned and (ii) private sector forecasters disagree about inflation expectations. To reconcile these two facts we introduce dispersed information in a New Keynesian model,...
Persistent link: https://www.econbiz.de/10011520661
What happens when fiscal and/or monetary policy changes systematically? We construct a DSGE model in which agents have to estimate fiscal and monetary policy rules and assess how uncertainty surrounding the conduct of policymakers influences transition paths after policy changes. We find that...
Persistent link: https://www.econbiz.de/10011292321