LEARNING RATIONAL EXPECTATIONS IN A POLICY GAME
The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics
Rational expectations is a maintained assumption in the analysis of economic policy. Here we examine how two types of learning rational expectations (rational and econometric) affect the time profile of optimal policy. In both cases the government adopts policies which delay convergence to rational expectations. There is also a reduction in the inflationary bias, in one case permanently in the other temporarily.
Pages: 24 pages
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Working Paper: LEARNING RATIONAL EXPECTATIONS IN A POLICY GAME (1988)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:297
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