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Do Actions Speak Louder than Words? Household Expectations of Inflation Based on Micro Consumption Data

Inoue, Atsushi; Kilian, Lutz; Kiraz, Fatma Burcu - C.E.P.R. Discussion Papers - 2006

Survey data on household expectations of inflation are routinely used in economic analysis, yet it is not clear to what …

Persistent link: https://www.econbiz.de/10005067515

Robust Learning Stability with Operational Monetary Policy Rules

Evans, George W.; Honkapohja, Seppo - C.E.P.R. Discussion Papers - 2008

We consider "robust stability" of a rational expectations equilibrium, which we define as stability under discounted (constant gain) least-squares learning, for a range of gain parameters. We find that for operational forms of policy rules, i.e. rules that do not depend on contemporaneous values...

Persistent link: https://www.econbiz.de/10005498187

Expectations, Learning and Monetary Policy: An Overview of Recent Rersearch

Evans, George W.; Honkapohja, Seppo - C.E.P.R. Discussion Papers - 2008

Expectations about the future are central for determination of current macroeconomic outcomes and the formulation of monetary policy. Recent literature has explored ways for supplementing the benchmark of rational expectations with explicit models of expectations formation that rely on...

Persistent link: https://www.econbiz.de/10005666454

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

Honkapohja, Seppo; Mitra, Kaushik - C.E.P.R. Discussion Papers - 2001

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...

Persistent link: https://www.econbiz.de/10005666726

Expectations and the Stability Problem for Optimal Monetary Policies

Evans, George W.; Honkapohja, Seppo - C.E.P.R. Discussion Papers - 2001

observed household and firm expectations. …

Persistent link: https://www.econbiz.de/10005666844

Monetary Policy, Expectations and Commitment

Evans, George W.; Honkapohja, Seppo - C.E.P.R. Discussion Papers - 2002

Commitment in monetary policy leads to equilibria that are superior to those from optimal discretionary policies. A number of interest rate reaction functions and instrument rules have been proposed to implement or approximate commitment policy. We assess these optimal reaction functions and...

Persistent link: https://www.econbiz.de/10005791257

Adaptive Learning and Monetary Policy Design

Evans, George W.; Honkapohja, Seppo - C.E.P.R. Discussion Papers - 2003

We review the recent work on interest rate setting, which emphasizes the desirability of designing policy to ensure stability under learning. Appropriately designed expectations-based rules can yield optimal rational expectations equilibria that are both determinate and stable under learning....

Persistent link: https://www.econbiz.de/10005791392

Robustness of Adaptive Expectations as an Equilibrium Selection Device

Lettau, Martin; Van Zandt, Timothy - C.E.P.R. Discussion Papers - 2001

Dynamic models in which agents' behaviour depends on expectations of future prices or other endogenous variables can have steady states that are stationary equilibria for a wide variety of expectations rules, including rational expectations. When there are multiple steady states, stability is a...

Persistent link: https://www.econbiz.de/10005791468

The Diversity of Forecasts from Macroeconomic Models of the U.S. Economy

Wieland, Volker; Wolters, Maik H - C.E.P.R. Discussion Papers - 2010

historical forecasts by professionals. The mean model forecast comes surprisingly close to the mean SPF and Greenbook forecasts … particularly well to professional forecasts at a horizon of three to four quarters and during recoveries. The extent of forecast … heterogeneity is similar for model and professional forecasts but varies substantially over time. Thus, forecast heterogeneity …

Persistent link: https://www.econbiz.de/10008530347

Policy Interaction, Learning and the Fiscal Theory of Prices

Evans, G W; Honkapohja, Seppo - C.E.P.R. Discussion Papers - 2002

We investigate both the rational explosive inflation paths studied by McCallum (2001), and the classification of fiscal and monetary policies proposed by Leeper (1991), for stability under learning of the rational expectations equilibria (REE). Our first result is that the fiscalist REE in the...

Persistent link: https://www.econbiz.de/10005136683