Anticipated Fiscal Policy and Adaptive Learning

George William Evans (), Seppo Mikko Sakari Honkapohja () and Kaushik Mitra ()

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: We consider the impact of anticipated policy changes when agents form expectations using adaptive learning rather than rational expectations. To model this we assume that agents combine limited structural knowledge with a standard adaptive learning rule. We analyze these issues using two well-known set-ups, an endowment economy and the Ramsey model. In our set-up there are important deviations from both rational expectations and purely adaptive learning. Our approach could be applied to many macroeconomic frameworks.

Keywords: Taxation; expectations; Ramsey model (search for similar items in EconPapers)
JEL-codes: E62 D84 E21 E43 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-knm, nep-mac and nep-pbe
Date: Written
Note: Ec
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Related works:
Working Paper: Anticipated Fiscal Policy and Adaptive Learning (2008)
Working Paper: Anticipated Fiscal Policy and Adaptive Learning (2007)
Working Paper: Anticipated Fiscal Policy and Adaptive Learning (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:cam:camdae:0705

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