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Policy Interaction, Learning, And The Fiscal Theory Of Prices Author info | Abstract | Publisher info | Download info | Related research | Statistics EVANS, GEORGE W.
HONKAPOHJA, SEPPO
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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 least squares (LS) learning of the rational expectations equilibria (REE). Our first result is that the explosive fiscalist REE is not locally stable under LS learning. In contrast, in Leeper s setting, there are policy regimes for which the fiscalist solution, in which fiscal variables affect the price level, can be a locally stable outcome under LS learning. However, for other policy regimes the monetarist solution is, instead, the locally stable REE.
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Article provided by Cambridge University Press in its journal Macroeconomic Dynamics .
Volume (Year): 11 (2007)
Issue (Month): 05 (July)
Pages: 665-690
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Handle: RePEc:cup:macdyn:v:11:y:2007:i:05:p:665-690_06Contact details of provider: Postal: The Edinburgh Building, Shaftesbury Road, Cambridge CB2 2RU UK Fax: +44 (0)1223 325150 Email:
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Paper George W. Evans & Seppo Honkapohja, 2002.
"Policy Interaction, Learning and the Fiscal Theory of Prices ,"
University of Oregon Economics Department Working Papers
2002-17, University of Oregon Economics Department, revised 07 Jun 2007.
[Downloadable!] Evans , George W. & Honkapohja, Seppo, 2002.
"Policy interaction, learning and the fiscal theory of prices ,"
Research Discussion Papers
18/2002, Bank of Finland.
[Downloadable!] Evans, G W & Honkapohja, Seppo, 2002.
"Policy Interaction, Learning and the Fiscal Theory of Prices ,"
CEPR Discussion Papers
3564, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Buiter, Willem H, 1998.
"The Young Person's Guide to Neutrality, Price Level Indeterminacy, Interest Rate Pegs and Fiscal Theories of the Price Level ,"
CEPR Discussion Papers
1799, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Other versions: Leeper, Eric M., 1991.
"Equilibria under 'active' and 'passive' monetary and fiscal policies ,"
Journal of Monetary Economics ,
Elsevier, vol. 27(1), pages 129-147, February.
[Downloadable!] (restricted)
repec:cup:macdyn:v:2:y:1998:i:2:p:156-82 is not listed on IDEAS
Carlstrom, Charles T. & Fuerst, Timothy S., 2001.
"Timing and real indeterminacy in monetary models ,"
Journal of Monetary Economics ,
Elsevier, vol. 47(2), pages 285-298, April.
[Downloadable!] (restricted)
Other versions: C.A. Sims, 1999.
"The Precarious Fiscal Foundations of EMU ,"
DNB Staff Reports (discontinued)
34, Netherlands Central Bank.
[Downloadable!]
McCallum, Bennett T., 2001.
"Indeterminacy, bubbles, and the fiscal theory of price level determination ,"
Journal of Monetary Economics ,
Elsevier, vol. 47(1), pages 19-30, February.
[Downloadable!] (restricted)
Other versions:
Bennett T. McCallum, .
"Indeterminacy, Bubbles, and the Fiscal Theory of Price Level Determination ,"
GSIA Working Papers
1998-19, Carnegie Mellon University, Tepper School of Business.
Bennett T. McCallum, 1998.
"Indeterminacy, Bubbles, and the Fiscal Theory of Price Level Determination ,"
NBER Working Papers
6456, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Howitt, Peter, 1992.
"Interest Rate Control and Nonconvergence to Rational Expectations ,"
Journal of Political Economy ,
University of Chicago Press, vol. 100(4), pages 776-800, August.
[Downloadable!] (restricted)
Evans, George W. & Honkapohja, Seppo, 1999.
"Learning dynamics ,"
Handbook of Macroeconomics ,
in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 7, pages 449-542
Elsevier.
[Downloadable!] (restricted)
Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Kauko, Karlo, 2002.
"Links between securities settlement systems: An oligopoly theoretic approach ,"
Research Discussion Papers
27/2002, Bank of Finland.
[Downloadable!]
Railavo, Jukka, 2003.
"Effects of the supply-side channel on stabilisation properties of policy rules ,"
Research Discussion Papers
34/2003, Bank of Finland.
[Downloadable!]
Bennett T. McCallum & Edward Nelson, 2006.
"Monetary and fiscal theories of the price level: the irreconcilable differences ,"
Working Papers
2006-010, Federal Reserve Bank of St. Louis.
[Downloadable!]
Other versions:
Bennett T. McCallum & Edward Nelson, 2006.
"Monetary and Fiscal Theories of the Price Level: The Irreconcilable Differences ,"
NBER Working Papers
12089, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Bennett T. McCallum & Edward Nelson, 2005.
"Monetary and Fiscal Theories of the Price Level: The Irreconcilable Differences ,"
Oxford Review of Economic Policy ,
Oxford University Press, vol. 21(4), pages 565-583, Winter.
Peik Granlund, 2004.
"Bank exit legislation in US, EU and Japanese financial centres ,"
Finance
0405015, EconWPA.
[Downloadable!]
Evans, George W & Honkapohja, Seppo, 2003.
"Adaptive Learning and Monetary Policy Design ,"
CEPR Discussion Papers
3962, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Other versions:
George W. Evans & Seppo Honkapohja, 2002.
"Adaptive Learning and Monetary Policy Design ,"
University of Oregon Economics Department Working Papers
2002-18, University of Oregon Economics Department, revised 04 Mar 2004.
[Downloadable!] George W. Evans & Seppo Honkapohja, 2004.
"Adaptive learning and monetary policy design ,"
Macroeconomics
0405008, EconWPA.
[Downloadable!] Evans, George W. & Honkapohja, Seppo, 2002.
"Adaptive learning and monetary policy design ,"
Research Discussion Papers
29/2002, Bank of Finland.
[Downloadable!] George W. Evans & Seppo Honkapohja, 2003.
"Adaptive learning and monetary policy design ,"
Proceedings ,
Federal Reserve Bank of Cleveland, pages 1045-1084.
George W. Evans & Seppo Honkapohja, 2003.
"Friedman's Money Supply Rule versus Optimal Interest Rate Policy ,"
University of Oregon Economics Department Working Papers
2003-30, University of Oregon Economics Department, revised 01 Oct 2003.
[Downloadable!]
Other versions: Railavo , Jukka, 2004.
"Stability consequences of fiscal policy rules ,"
Research Discussion Papers
1/2004, Bank of Finland.
[Downloadable!]
Karlo Kauko, 2004.
"Links between securities settlement systems: An oligopoly theoretic approach ,"
Industrial Organization
0405003, EconWPA.
[Downloadable!]
Orlando Gomes, .
"Volatility, Heterogeneous Agents and Chaos ,"
The Electronic Journal of Evolutionary Modeling and Economic Dynamics ,
IFReDE - Université Montesquieu Bordeaux IV.
[Downloadable!]
Other versions: George W. Evans & Seppo Honkapohja, 2004.
"Friedman’s money supply rule vs optimal interest rate policy ,"
Macroeconomics
0405002, EconWPA.
[Downloadable!]
Other versions:
Evans, George W. & Honkapohja, Seppo, 2003.
"Friedman's money supply rule vs optimal interest rate policy ,"
Research Discussion Papers
10/2003, Bank of Finland.
[Downloadable!] George W. Evans & Seppo Honkapohja, 2003.
"Friedman's Money Supply Rule vs. Optimal Interest Rate Policy ,"
Scottish Journal of Political Economy ,
Scottish Economic Society, vol. 50(5), pages 550-566, November.
[Downloadable!] (restricted) Granlund , Peik, 2002.
"Bank exit legislation in US, EU and Japanese financial centres ,"
Research Discussion Papers
25/2002, Bank of Finland.
[Downloadable!]
Ragna Alstadheim & Dale W. Henderson, 2004.
"Price-level determinacy, lower bounds on the nominal interest rate, and liquidity traps ,"
International Finance Discussion Papers
795, Board of Governors of the Federal Reserve System (U.S.).
[Downloadable!]
Other versions:
Ragna Alstadheim & Dale Henderson, 2006.
"Price-level determinacy, lower bounds on the nominal interest rate, and liquidity traps ,"
Working Paper
2006/03, Norges Bank.
[Downloadable!] Ragna Alstadheim & Dale Henderson, 2006.
"Price-Level Determinacy, Lower Bounds on the Nominal Interest Rate, and Liquidity Traps ,"
Contributions to Macroeconomics ,
Berkeley Electronic Press, vol. 6(1), pages 1437-1437.
[Downloadable!] (restricted) Jukka Railavo, 2004.
"Stability consequences of fiscal policy rules ,"
Macroeconomics
0404020, EconWPA.
[Downloadable!]
Jukka Railavo, 2004.
"Effects of the supply-side channel on stabilisation properties of policy rules ,"
Macroeconomics
0404028, EconWPA.
[Downloadable!]
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