Irrational expectations and econometric practice: discussion of Orphanides and Williams, "Inflation scares and forecast-based monetary policy"

Peter Ireland ()

No 2003-22, Working Paper from Federal Reserve Bank of Atlanta

Abstract: Athanasios Orphanides and John C. Williams' excellent conference paper, "Inflation Scares and Forecast-Based Monetary Policy," contributes importantly to the new and rapidly growing branch of the literature on bounded rationality and learning in macroeconomics. Their paper, like many others, derives interesting and useful theoretical results that show how the introduction of bounded rationality and learning impacts on the effects of monetary policy shocks and the characteristics of optimal monetary policy rules. This note suggests that some additional empirical work-some "irrational expectations econometrics," if you will-might serve to make these purely theoretical results seem more relevant and convincing.

Keywords: Equilibrium (Economics); Monetary policy; Macroeconomics; Inflation (Finance); Forecasting (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-evo and nep-mon
Date: 2003
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