Orphanides, Athanasios (contributor); … - 2005
the economy X and the state of beliefs governing the formation of
expectations, c and R. Depending on the initial … conditions, {X,c,R}, the response to any
given shock differs. To summarize the range of possible outcomes in the figure, we plot … distribution of impulse responses corresponding
to the stationary distribution of {X,c,R}. Under rational expectations, the …