IDEAS home Printed from https://ideas.repec.org/p/fip/fedawp/2003-19.html
   My bibliography  Save this paper

Discussion of Preston, \"Learning about monetary policy rules when long-horizon expectations matter\"

Author

Abstract

The design of interest rate rules for conducting monetary policy have recently been examined for two key concerns. The first issue is determinacy of equilibria. Indeterminacy (multiplicity of stationary rational expectations equilibria) is a concern in models of monopolistic competition and price stickiness are currently a popular framework for the study of monetary policy. The second issue is stability of equilibria under adaptive learning. Some interest rate rules do not perform well when the expectations of the agents get out of equilibrium, e.g. as a result of structural shifts.

Suggested Citation

  • Seppo Honkapohja, 2003. "Discussion of Preston, \"Learning about monetary policy rules when long-horizon expectations matter\"," FRB Atlanta Working Paper 2003-19, Federal Reserve Bank of Atlanta.
  • Handle: RePEc:fip:fedawp:2003-19
    as

    Download full text from publisher

    File URL: http://www.frbatlanta.org/filelegacydocs/wp0319.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bullard, James & Mitra, Kaushik, 2002. "Learning about monetary policy rules," Journal of Monetary Economics, Elsevier, vol. 49(6), pages 1105-1129, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kobayashi, Teruyoshi & Muto, Ichiro, 2013. "A Note On Expectational Stability Under Nonzero Trend Inflation," Macroeconomic Dynamics, Cambridge University Press, vol. 17(3), pages 681-693, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. de Truchis, Gilles & Dell’Eva, Cyril & Keddad, Benjamin, 2017. "On exchange rate comovements: New evidence from a Taylor rule fundamentals model with adaptive learning," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 48(C), pages 82-98.
    2. Stefano Eusepi, 2005. "Comparing forecast-based and backward-looking Taylor rules: a "global" analysis," Staff Reports 198, Federal Reserve Bank of New York.
    3. Ragna Alstadheim & Øistein Røisland, 2017. "When Preferences for a Stable Interest Rate Become Self‐Defeating," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 49(2-3), pages 393-415, March.
    4. Giuseppe Ferrero, 2004. "Monetary Policy and the Transition to Rational Expectations," Econometric Society 2004 North American Summer Meetings 101, Econometric Society.
    5. Stefano Eusepi & Bruce Preston, 2008. "Stabilizing Expectations under Monetary and Fiscal Policy Coordination," NBER Working Papers 14391, National Bureau of Economic Research, Inc.
    6. Michael Woodford, 2001. "The Taylor Rule and Optimal Monetary Policy," American Economic Review, American Economic Association, vol. 91(2), pages 232-237, May.
    7. Kurozumi, Takushi & Van Zandweghe, Willem, 2010. "Labor market search, the Taylor principle, and indeterminacy," Journal of Monetary Economics, Elsevier, vol. 57(7), pages 851-858, October.
    8. George W. Evans & Seppo Honkapohja, 2009. "Robust Learning Stability with Operational Monetary Policy Rules," Central Banking, Analysis, and Economic Policies Book Series, in: Klaus Schmidt-Hebbel & Carl E. Walsh & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series (ed.),Monetary Policy under Uncertainty and Learning, edition 1, volume 13, chapter 5, pages 145-170, Central Bank of Chile.
    9. McKnight, Stephen, 2018. "Investment And Forward-Looking Monetary Policy: A Wicksellian Solution To The Problem Of Indeterminacy," Macroeconomic Dynamics, Cambridge University Press, vol. 22(5), pages 1345-1369, July.
    10. Kobayashi, Teruyoshi & Muto, Ichiro, 2013. "A Note On Expectational Stability Under Nonzero Trend Inflation," Macroeconomic Dynamics, Cambridge University Press, vol. 17(3), pages 681-693, April.
    11. Hommes, C.H. & Lustenhouwer, J., 2016. "Managing Heterogeneous and Unanchored Expectations: A Monetary Policy Analysis," CeNDEF Working Papers 16-01, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
    12. Honkapohja, Seppo & Mitra, Kaushik, 2005. "Performance of inflation targeting based on constant interest rate projections," Journal of Economic Dynamics and Control, Elsevier, vol. 29(11), pages 1867-1892, November.
    13. Gomes, Orlando, 2009. "Stability under learning: The endogenous growth problem," Economic Modelling, Elsevier, vol. 26(5), pages 807-816, September.
    14. William A. Branch & George W. Evans & Bruce McGough, 2010. "Finite Horizon Learning," University of Oregon Economics Department Working Papers 2010-15, University of Oregon Economics Department.
    15. 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.
    16. Bennett T. McCallum & Edward Nelson, 2004. "Timeless perspective vs. discretionary monetary policy in forward-looking models," Review, Federal Reserve Bank of St. Louis, vol. 86(Mar), pages 43-56.
    17. Mostafavi, Moeen & Shakouri G., Hamed & Fatehi, Ali-Reza, 2010. "Why the determinacy condition is a weak criterion in rational expectations models," MPRA Paper 28320, University Library of Munich, Germany.
    18. Marco Airaudo & Salvatore Nisticò & Luis‐Felipe Zanna, 2015. "Learning, Monetary Policy, and Asset Prices," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(7), pages 1273-1307, October.
    19. Patrick Minford & Naveen Srinivasan, 2015. "Can the Learnability Criterion Ensure Determinacy in New Keynesian Models?," South Asian Journal of Macroeconomics and Public Finance, , vol. 4(1), pages 43-61, June.
    20. Hommes, Cars & Zhu, Mei, 2014. "Behavioral learning equilibria," Journal of Economic Theory, Elsevier, vol. 150(C), pages 778-814.

    More about this item

    Keywords

    Equilibrium (Economics); Monetary policy; Macroeconomics;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedawp:2003-19. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/frbatus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://edirc.repec.org/data/frbatus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.