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Robust Stability of Monetary Policy Rules under Adaptive Learning

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  • Eric Gaus

Abstract

Recent research has explored how minor changes in expectation formation can change the stability properties of a model (; ). This article builds on this research by examining an economy subject to a variety of monetary policy rules under an endogenous learning algorithm proposed by . The results indicate that operational versions of optimal discretionary rules are not robustly stable, as in . In addition, commitment rules are not robust to minor changes in expectational structure and parameter values.

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  • Eric Gaus, 2013. "Robust Stability of Monetary Policy Rules under Adaptive Learning," Southern Economic Journal, John Wiley & Sons, vol. 80(2), pages 439-453, October.
    • Handle: RePEc:wly:soecon:v:80:y:2013:i:2:p:439-453
    DOI: 10.4284/0038-4038-2012.071
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    Cited by:

    1. Marzioni, Stefano & Traficante, Guido, 2023. "Learning with uncertain inflation target," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 624-634.

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