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Adaptive Learning and Monetary Policy Design Author info | Abstract | Publisher info | Download info | Related research | Statistics George W. Evans () (University of Oregon Economics Department)
Seppo Honkapohja (University of Helsinki)
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We review the recent work on interest rate setting, which emphasizes the desireability of designing policy to ensure stability under private agent learning. Appropriately designed expectations based rules can yield optimal rational expectations equilibria that are both determinate and stable under learning. Some simple instrument rules and approximate targeting rules also have these desirable properties. We take up various complications in implementing optimal policy, including the observability of key variables and the required knowledge of structural parameters. An additional issue that we take up concerns the implications of expectation shocks not arising from transitional learning effects.
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Paper provided by University of Oregon Economics Department in its series University of Oregon Economics Department Working Papers with number
2002-18.
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Length: 33
Date of creation: 08 Nov 2002Date of revision:
04 Mar 2004Handle: RePEc:ore:uoecwp:2002-18Contact details of provider: Postal: 1285 University of Oregon, 435 PLC, Eugene, OR 97403-1285 Phone: (541) 346-4661 Fax: (541) 346-1243 Email: Web page: http://economics.uoregon.edu/ More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Bill Harbaugh).
Keywords: Commitment interest rate setting adaptive learning stability expectations shocks Other versions of this item:
Article Paper George W. Evans & Seppo Honkapohja, 2004.
"Adaptive learning and monetary policy design ,"
Macroeconomics
0405008, 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) Evans, George W. & Honkapohja, Seppo, 2002.
"Adaptive learning and monetary policy design ,"
Research Discussion Papers
29/2002, Bank of Finland.
[Downloadable!] Find related papers by JEL classification: E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
This paper has been announced in the following NEP Reports :
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Evans , George W. & Honkapohja, Seppo, 2002.
"Policy interaction, learning and the fiscal theory of prices ,"
Research Discussion Papers
18/2002, Bank of Finland.
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Other versions:
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, 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) Evans, George W. & Honkapohja, Seppo, 2007.
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Honkapohja, Seppo & Mitra, Kaushik, 2002.
"Performance of monetary policy with internal central bank forecasting ,"
Research Discussion Papers
3/2002, Bank of Finland.
[Downloadable!]
Other versions:
Kaushik Mitra & Seppo Honkapohja, 2004.
"Performance of Monetary Policy with Internal Central Bank Forecasting ,"
Royal Holloway, University of London: Discussion Papers in Economics
04/18, Department of Economics, Royal Holloway University of London, revised Jul 2004.
[Downloadable!] Seppo Honkapohja & Kaushik Mitra, 2002.
"Performance of monetary policy with nternal Central Bank forecasting ,"
Working Paper Series
127, European Central Bank.
[Downloadable!] Honkapohja, Seppo & Mitra, Kaushik, 2005.
"Performance of monetary policy with internal central bank forecasting ,"
Journal of Economic Dynamics and Control ,
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[Downloadable!] (restricted) George W. Evans & Seppo Honkapohja, 2003.
"Expectations and the Stability Problem for Optimal Monetary Policies ,"
Review of Economic Studies ,
Blackwell Publishing, vol. 70(4), pages 807-824, October.
[Downloadable!] (restricted)
Other versions:
Evans, George W. & Honkapohja, Seppo, 2000.
"Expectations and the stability problem for optimal monetary policies ,"
Discussion Paper Series 1: Economic Studies
2000,10, Deutsche Bundesbank, Research Centre.
[Downloadable!] Evans, George W & Honkapohja, Seppo, 2001.
"Expectations and the Stability Problem for Optimal Monetary Policies ,"
CEPR Discussion Papers
2805, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) George W. Evans & Seppo Honkapohja, 2001.
"Expectations and the Stability Problem for Optimal Monetary Policies ,"
University of Oregon Economics Department Working Papers
2001-6, University of Oregon Economics Department, revised 03 Aug 2001.
[Downloadable!] Honkapohja, S. & Evans, G.W., 2000.
"Expectations and the Stability Problem for Optimal Monetary Policies ,"
University of Helsinki, Department of Economics
481, Department of Economics.
Svensson, Lars E. O., 1999.
"Inflation targeting as a monetary policy rule ,"
Journal of Monetary Economics ,
Elsevier, vol. 43(3), pages 607-654, June.
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Other versions:
Lars E.O. Svensson, 1998.
"Inflation Targeting as a Monetary Policy Rule ,"
NBER Working Papers
6790, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Svensson, Lars E.O., 1998.
"Inflation Targeting as a Monetary Policy Rule ,"
Seminar Papers
646, Stockholm University, Institute for International Economic Studies.
[Downloadable!] Svensson, L.E.O., 1998.
"Inflation Targeting as a Monetary Policy Rule ,"
Papers
646, Stockholm - International Economic Studies.
Svensson, Lars E O, 1998.
"Inflation Targeting as a Monetary Policy Rule ,"
CEPR Discussion Papers
1998, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Richard Clarida & Jordi Galí & Mark Gertler, 2000.
"Monetary Policy Rules And Macroeconomic Stability: Evidence And Some Theory ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 115(1), pages 147-180, February.
[Downloadable!] (restricted)
Other versions:
Clarida, Richard & Galí, Jordi & Gertler, Mark, 1998.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory ,"
CEPR Discussion Papers
1908, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Richard Clarida & Jordi Gali & Mark Gertler, 1998.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory ,"
NBER Working Papers
6442, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Richard Clarida & Jordi Galí & Mark Gertler, 1997.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory ,"
Economics Working Papers
350, Department of Economics and Business, Universitat Pompeu Fabra, revised May 1999.
[Downloadable!] Clarida, R. & Gali, J. & Gertler, M., 1998.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and some Theory ,"
Working Papers
98-01, C.V. Starr Center for Applied Economics, New York University.
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"Control of the Public Debt: A Requirement for Price Stability? ,"
NBER Working Papers
5684, National Bureau of Economic Research, Inc.
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Clarida, Richard & Gali, Jordi & Gertler, Mark, 1998.
"Monetary policy rules in practice Some international evidence ,"
European Economic Review ,
Elsevier, vol. 42(6), pages 1033-1067, June.
[Downloadable!] (restricted)
Other versions:
Richard Clarida & Jordi Gali & Mark Gertler, 1997.
"Monetary Policy Rules in Practice: Some International Evidence ,"
NBER Working Papers
6254, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Clarida, Richard & Gali, Jordi & Gertler, Mark, 1997.
"Monetary Policy Rules in Practice: Some International Evidence ,"
Working Papers
97-32, C.V. Starr Center for Applied Economics, New York University.
[Downloadable!] Clarida, Richard & Galí, Jordi & Gertler, Mark, 1997.
"Monetary Policy Rules in Practice: Some International Evidence ,"
CEPR Discussion Papers
1750, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
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