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Are Non-Fundamental Equilibria Learnable in Models of Monetary Policy?

Kaushik Mitra () and Seppo Honkapohja ()

No 04/13, Royal Holloway, University of London: Discussion Papers in Economics from Department of Economics, Royal Holloway University of London

Abstract: Recent models of monetary policy can have indeterminacy of equilibria, which is often viewed as a di±culty of these models. We consider the significance of indeterminacy using the learning approach to expectations formation. We employ expectational stability as a selection criterion for different equilibria and derive the expectational stability and instability conditions for forward-looking multivariate models, both without and with lags. The results are applied to several monetary policies.

Keywords: Adaptive learning; stability; sunspots; monetary policy (search for similar items in EconPapers)
JEL-codes: E52 E31 D84 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-mon
Date: 2004-07, Revised 2004-07
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Related works:
Journal Article: Are non-fundamental equilibria learnable in models of monetary policy? (2004) Downloads
Working Paper: Are Non-Fundamental Equilibria Learnable in Models of Monetary Policy? (2001) Downloads
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? Downloads
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