Time-varying policy rule under learning

Previous literature has shown that, in a New Keynesian model, an expectations based policy rule induces E-stability of the fundamental equilibrium, while a fundamentals based one does not. We derive an alternative rule, based only on fundamentals, which can also achieve stability of equilibrium under learning. This policy has parameters that evolve over time and is adaptively learnable by the policymaker.

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Year of publication:	2015
Authors:	Berardi, Michele
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 129.2015, C, p. 25-28
Publisher:	Elsevier
Subject:	Monetary policy \| Expectations \| Learning \| E-stability

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Type of publication:	Article
Classification:	E52 - Monetary Policy (Targets, Instruments, and Effects) ; E58 - Central Banks and Their Policies ; D84 - Expectations; Speculations
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011263396