The stability of macroeconomic systems with Bayesian learners

James Bullard and Jacek Suda

No 2008-043, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We study abstract macroeconomic systems in which expectations play an important role. Consistent with the recent literature on recursive learning and expectations, we replace the agents in the economy with econometricians. Unlike the recursive learning literature, however, the econometricians in the analysis here are Bayesian learners. We are interested in the extent to which expectational stability remains the key concept in the Bayesian environment. We isolate conditions under which versions of expectational stability conditions govern the stability of these systems just as in the standard case of recursive learning. We conclude that the more sophisticated Bayesian learning schemes do not alter the essential expectational stability findings in the literature.

Keywords: Rational; expectations; (Economic; theory) (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-cba and nep-mac
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: The stability of macroeconomic systems with Bayesian learners (2016)
Working Paper: The stability of macroeconomic systems with Bayesian learners (2015)
Working Paper: The Stability of Macroeconomic Systems with Bayesian Learners (2011)
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DOI: 10.20955/wp.2008.043

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