Showing 1 - 10 of 430
expectations from the central bank's objective. This is shown within a framework where agents form expectations using adaptive … properties of inflation expectations in the euro area. Our results also suggest that monetary policy may lose effectiveness if … delayed too much, as expectations are allowed to drift away from target for too long …
Persistent link: https://www.econbiz.de/10012963942
knowledge of their personal circumstances but 'sticky expectations' about the macroeconomy. In our model, the persistence of …
Persistent link: https://www.econbiz.de/10012918032
expectations by Bayesian learning based on observations from their own lifetimes. In this model, the stock price exhibits … stochastic boom-and-bust fluctuations around the rational expectations equilibrium. This heterogeneous-agents economy can be …
Persistent link: https://www.econbiz.de/10013119137
may or may not coordinate on the rational equilibrium outcome. A general finding is that under positive expectations … feedback (strategic complementarity) -where optimistic (pessimistic) expectations can cause a boom (bust)- coordination … by coordination on trend-following behavior leading to (almost-)self-fulfilling equilibria. Heterogeneous expectations …
Persistent link: https://www.econbiz.de/10012907638
expected future inflation. With rational inflation expectations, the economy does not generate persistent deviations of output … considerable persistence and regular cyclical patterns. Such behavior emerges because subjects’ inflation expectations fail to be … captured by rational expectations functions. Instead, a Restricted Perceptions Equilibrium (RPE), which assumes that agents use …
Persistent link: https://www.econbiz.de/10011604538
This paper explores the role that inflation forecasts play in the uncertainty surrounding the estimated effects of alternative monetary rules on unemployment dynamics in the euro area and the US. We use the inflation forecasts of 8 competing models in a standard Bayesian VAR to analyse the size...
Persistent link: https://www.econbiz.de/10011604771
This paper provides evidence on the reliability of euro area real-time output gap estimates. A genuine real-time data set for the euro area is used, including vintages of several sets of euro area output gap estimates available from 1999 to 2006. It turns out that real-time estimates of the...
Persistent link: https://www.econbiz.de/10011605203
This paper analyzes monetary policy in a model with a potential unanchoring of inflation expectations. The degree of … unanchoring is given by how sensitively the public’s long-run inflation expectations respond to inflation surprises. I find that … optimal policy moves the interest rate aggressively when expectations unanchor, allowing the central bank to accommodate …
Persistent link: https://www.econbiz.de/10014079837
find a higher average forecast accuracy of models that incorporate information on inflation expectations from the ECB’s SPF … inflation expectations are typically not large but significant in some periods. Both short- and long-term expectations provide … useful information. By contrast, incorporating expectations derived from financial market prices or those of firms and …
Persistent link: https://www.econbiz.de/10013324272
The aim of this study is to assess the extent to which the degree of heterogeneity of inflation expectations is driven … expectations, i.e. to reduce forecast heterogeneity; and iii) We augment some otherwise standard models of expectation formation by … inflation expectations over long periods of time. …
Persistent link: https://www.econbiz.de/10011605520