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

Abstract: 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; Stability; Sunspots; Monetary policy (search for similar items in EconPapers)
JEL-codes: D84 E31 E52 (search for similar items in EconPapers)
Date: 2001-06
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Citations: View citations in EconPapers (22)

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Related works:
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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