Adaptive learning and monetary policy design
George Evans () and
Seppo Honkapohja ()
Proceedings, 2003, 1045-1084
We review the recent work on interest rate setting, which emphasizes the desirability of designing policy to ensure stability under learning. Appropriately designed expectations-based rules can yield optimal rational expectations (REs) equilibria that are both determinate and stable under learning. Some simple instrument rules and approximate targeting rules also have these desirable properties. We discuss various complications in implementing optimal policy, including the observability of key variables and the required knowledge of structural parameters. An additional issue that we take up concerns the implications of expectation shocks not arising from transitional learning effects.
Keywords: Monetary policy; Interest rates (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (110) Track citations by RSS feed
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
Working Paper: Adaptive Learning and Monetary Policy Design (2004)
Working Paper: Adaptive learning and monetary policy design (2004)
Working Paper: Adaptive Learning and Monetary Policy Design (2003)
Working Paper: Adaptive learning and monetary policy design (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcpr:y:2003:p:1045-1084
Ordering information: This journal article can be ordered from
Access Statistics for this article
More articles in Proceedings from Federal Reserve Bank of Cleveland Contact information at EDIRC.
Bibliographic data for series maintained by 4D Library ().