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Performance of monetary policy with internal central bank forecasting

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  • Honkapohja, Seppo
  • Mitra, Kaushik

Abstract

Recent models of monetary policy have analyzed the desirability of different optimal and ad hoc interest rules under the restrictive assumption that forecasts of the private sector and the central bank are homogenous. In this paper, we study the implications of heterogeneity in forecasts of the central bank and private agents for the performance of interest rules from the learning viewpoint. JEL Classification: E52, E31, D84

Suggested Citation

  • Honkapohja, Seppo & Mitra, Kaushik, 2002. "Performance of monetary policy with internal central bank forecasting," Working Paper Series 127, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:2002127
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    References listed on IDEAS

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    More about this item

    Keywords

    adaptive learning; heterogeneity; monetary policy; stability;
    All these keywords.

    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

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