Determinacy and e-stability under reduced-form learning

Under reduced-form learning, agents are endowed with an aggregate model, and rational expectations are then replaced with subjective expectations. This paper demonstrates that the reduced-form learning approach may be arbitrary in that a particular representation of aggregate dynamics has particular e-stability properties even though the underlying model’s behavior is meant to be unique.

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Year of publication:	2015
Authors:	Cho, Seonghoon
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 128.2015, C, p. 69-71
Publisher:	Elsevier
Subject:	Determinacy \| e-stability \| Reduced-form learning \| Euler-equation learning \| Law of iterative expectation

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Type of publication:	Article
Classification:	D8 - Information and Uncertainty ; E4 - Money and Interest Rates ; E5 - Monetary Policy, Central Banking and the Supply of Money and Credit
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011208459