Are Non-Fundamental Equilibria Learnable in Models of Monetary Policy?
Seppo Honkapohja () and
Kaushik Mitra ()
No 2846, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Recent models of monetary policy can have indeterminacy of equilibria. The indeterminacy property is often viewed as a difficulty of these models. We consider its significance using the learning approach to expectations formation by employing expectational stability as a robustness criterion for different equilibria. We derive the expectational stability and instability conditions for forward-looking multivariate models, both with and without lags, that cover a wide range of monetary policies proposed in the literature.
Keywords: Adaptive Learning; Monetary policy; Stability; Sunspots (search for similar items in EconPapers)
JEL-codes: D84 E31 E52 (search for similar items in EconPapers)
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Journal Article: Are non-fundamental equilibria learnable in models of monetary policy? (2004)
Working Paper: Are Non-Fundamental Equilibria Learnable in Models of Monetary Policy? (2004)
Working Paper: Are Non-Fundamental Equilibria Learnable in Models of Monetary Policy? (2001)
Working Paper: Are Non-Fundamental Equilibria Learnable in Models of Monetary Policy?
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