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

Seppo Honkapohja () and Kaushik Mitra ()

Discussion Papers from Department of Economics, University of York

Abstract: Recent models of monetary policy can have indeterminacy of equilibria. The indeterminacy property is often viewed as a difficulty of these models. We consider its significance using the learning approach to expectations formation by employing expectational stability as a robustness criterion for different equilibria. We derive the expectational stability and instability conditions for forward-looking multivariate models, both with and without lags, that cover a wide range of monetary policies proposed in the literature.

Keywords: Adaptive learning; stability; sunspots; monetary policy. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mon
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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? (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)
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