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On the Perils of Stabilizing Prices when Agents are Learning

Mele, Antonio - 2018

's ability to shape expectations. We show that stabilizing prices is no longer optimal when the central bank can shape … expectations of agents with incomplete knowledge, who have to learn about the policy implemented. Disinflating in the short run … expectations sluggishly. Following this policy, in the long run, the central bank loses the ability to shape agents' beliefs, and …

Persistent link: https://www.econbiz.de/10012908312

On the Perils of Stabilizing Prices When Agents are Learning

Mele, Antonio - 2015

term gains without triggering an abrupt loss of confidence, since agents update expectations sluggishly. In the long run … agents learn the policy implemented, and the economy converges to a rational expectations equilibrium in which policy does …

Persistent link: https://www.econbiz.de/10013028904

On the Perils of Stabilizing Prices When Agents are Learning

Mele, Antonio - 2015

Persistent link: https://www.econbiz.de/10013029791

Constrained Discretion and Central Bank Transparency

Bianchi, Francesco - 2016

We develop and estimate a general equilibrium model to quantitatively assess the effects and welfare implications of central bank transparency. Monetary policy can deviate from active inflation stabilization and agents conduct Bayesian learning about the nature of these deviations. Under...

Persistent link: https://www.econbiz.de/10012979124

Inflation narratives

Andre, Peter; Haaland, Ingar; Roth, Christopher; … - 2021

We provide evidence on the stories that people tell to explain a historically notable rise in inflation using samples of experts, U.S. households, and managers. We document substantial heterogeneity in narratives about the drivers of higher inflation rates. Experts put more emphasis on...

Persistent link: https://www.econbiz.de/10012799460

Constrained Discretion and Central Bank Transparency

Bianchi, Francesco - 2014

We develop and estimate a general equilibrium model in which monetary policy can deviate from active inflation stabilization and agents face uncertainty about the nature of these deviations. When observing a deviation, agents conduct Bayesian learning to infer its likely duration. Under...

Persistent link: https://www.econbiz.de/10013040336

Constrained Discretion and Central Bank Transparency

Bianchi, Francesco - 2015

Persistent link: https://www.econbiz.de/10013035522

Inflation Narratives

Andre, Peter; Haaland, Ingar; Roth, Christopher; … - 2022

We survey retail investors at an online bank to study beliefs about the autocorrelation of aggregate stock returns, and how these beliefs shape investment decisions measured in administrative account data. Individuals' beliefs exhibit substantial heterogeneity and predict trading responses to...

Persistent link: https://www.econbiz.de/10013307010

Endogenously (non-)Ricardian beliefs

Branch, William A.; Gasteiger, Emanuel - 2019

This paper develops a theory of endogenously (non-)Ricardian beliefs. That is, whether Ricardian Equivalence holds in an equilibrium depends on endogenous private sector beliefs. The novelty here is a restricted perceptions viewpoint: in complex forecasting environments, agents forecast...

Persistent link: https://www.econbiz.de/10011988962

Escapist policy rules

Bullard, James; Cho, In-Koo - 2003

We study a simple, microfounded macroeconomic system in which the monetary authority employs a Taylor-type policy rule. We analyze situations in which the self-confirming equilibrium is unique and learnable according to Bullard and Mitra (2002). We explore the prospects for the use of 'large...

Persistent link: https://www.econbiz.de/10010298275