EconPapers    
Economics at your fingertips  
 

Learning, Experimentation and Monetary Policy

Graziella Bertocchi () and Michael Spagat ()

No 1991018, Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: We present a model of monetary policy where the policymaker faces uncertainty about wich he is learning in a Bayesian fashion. A fixed money supply levels. A fixed money supply rule is not optimal in this context since the learning leads to constant adjustments in money supply levels. We present cases in which it is optimal to bear some cost in terms of current output performance in order to gain information that can be used in the formulation of future monetary policy : experimentation therefore pays. We also show that even passive learning without experimentation still leads to an activist monetary policy, i.e. one that is constantly changing in response to new information.

Keywords: monetary; policy (search for similar items in EconPapers)
JEL-codes: E0 E5 D8 (search for similar items in EconPapers)
Date: 1991-10-01
References: Add references at CitEc
Citations: View citations in EconPapers (17) Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Learning, experimentation, and monetary policy (1993) 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:ctl:louvir:1991018

Access Statistics for this paper

More papers in Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Place Montesquieu 3, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Virginie LEBLANC ().

 
Page updated 2019-07-09
Handle: RePEc:ctl:louvir:1991018