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Discussion of Preston, "Learning about monetary policy rules when long-horizon expectations matter"

Seppo Honkapohja ()

No 2003-19, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: The design of interest rate rules for conducting monetary policy have recently been examined for two key concerns. The first issue is determinacy of equilibria. Indeterminacy (multiplicity of stationary rational expectations equilibria) is a concern in models of monopolistic competition and price stickiness are currently a popular framework for the study of monetary policy. The second issue is stability of equilibria under adaptive learning. Some interest rate rules do not perform well when the expectations of the agents get out of equilibrium, e.g. as a result of structural shifts.

Keywords: Equilibrium (Economics); Monetary policy; Macroeconomics (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mon
Date: 2003
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