EconPapers    
Economics at your fingertips  
 

Adaptive Learning and Monetary Policy Design

George Evans () and Seppo Honkapohja ()

No 3962, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: 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 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: adaptive learning; commitment; determinacy; expectations shocks; interest rate setting; stability (search for similar items in EconPapers)
JEL-codes: D84 E31 E52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mon
Date: 2003-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (110) Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=3962 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Adaptive Learning and Monetary Policy Design (2004) Downloads
Working Paper: Adaptive learning and monetary policy design (2004) Downloads
Journal Article: Adaptive learning and monetary policy design (2003)
Working Paper: Adaptive learning and monetary policy design (2002) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:3962

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=3962

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2019-12-02
Handle: RePEc:cpr:ceprdp:3962