Learning about monetary policy rules

Bullard, James B.; Mitra, Kaushik

doi:10.1016/s0304-3932(02)00144-7

Cited by 685 publications

(831 citation statements)

References 19 publications

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“…10 Both of these assumptions can be questioned. It is a common-place convenience of macroecono- 9 In fact, in this example, the intercept coefficient, a, turns out to be irrelevant for the determination of learnability, although this result is not general. 10 Evans and Honkapohja [17] survey variations on least-squares learning, including under-and overparameterized learning models and discounted (or constant-gain) least squares learning.…”

Section: Structured Robust Controlmentioning

confidence: 90%

“…The important points to take from equations (9) are that the conditions are generally multivariate in nature-meaning that the coefficients constraining the intercept term, a, can be conflated with those of the slope term, b, and that the coefficients of both the PLM and the ALM come into play. Learnability applications in the literature to date have been confined to very simple, small-scale models where these problems rarely come into play.…”

Section: Expectational Equilibrium Under Adaptive Learningmentioning

confidence: 99%

“…The choice of a particular policy can shrink or expand the range of values for a, b, and c that is consistent with E-stability. 9 This is our concern in this paper: how can a policy maker deal with uncertainty in agents' learning mechanisms in the choice of his or her policy rule and thereby maximize the prospect that the economy will converge successfully on a rational expectations equilibrium? For this, we work with perturbations to the T-mapping described by equations (8) or systems like it.…”

Section: Expectational Equilibrium Under Adaptive Learningmentioning

confidence: 99%

“…Evans and Honkapohja [18] study this model to explore issues of determinacy and learnability for several optimal commitment rules. Bullard and Mitra [9] likewise use the Woodford model to examine determinacy and learnability of variants of the Taylor rule.…”

Section: The Canonical New Keynesian Modelmentioning

confidence: 99%

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Robustifying learnability

Tetlow

Muehlen

2009

Journal of Economic Dynamics and Control

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Section: Structured Robust Controlmentioning

confidence: 90%

Section: Expectational Equilibrium Under Adaptive Learningmentioning

confidence: 99%

Section: Expectational Equilibrium Under Adaptive Learningmentioning

confidence: 99%

Section: The Canonical New Keynesian Modelmentioning

confidence: 99%

See 2 more Smart Citations

Robustifying learnability

Tetlow

Muehlen

2009

Journal of Economic Dynamics and Control

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“…Under that speci…cation of monetary policy, a straightforward application of the …ndings of Bullard and Mitra (2001) to our model, implies that the equilibrium for the union will be uniquely determined if and only if > 1, i.e., if the central bank adjusts the short-term nominal rate more than onefor-one in response to variations in union-wide in ‡ation t . 13 Given the equilibrium values for b y t , one can easily back out aggregate consumption b c t (using (28)), as well as other variables of interest.…”

Section: Equilibrium Determinacy In the Currency Union: A Digressionmentioning

confidence: 97%

Optimal Monetary and Fiscal Policy in a Currency Union

Monacelli

Galı́

2005

SSRN Journal

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We lay out a tractable model for …scal and monetary policy analysis in a currency union, and analyze its implications for the optimal design of such policies. Monetary policy is conducted by a common central bank, which sets the interest rate for the union as a whole. Fiscal policy is implemented at the country level, through the choice of government spending level. The model incorporates country-speci…c shocks and nominal rigidities. Under our assumptions, the optimal monetary policy requires that in ‡ation be stabilized at the union level. On the other hand, the relinquishment of an independent monetary policy, coupled with nominal price rigidities, generates a stabilization role for …scal policy, one beyond the e¢ cient provision of public goods. Interestingly, the stabilizing role for …scal policy is shown to be desirable not only from the viewpoint of each individual country, but also from that of the union as a whole. In addition, our paper o¤ers some insights on two aspects of policy design in currency unions: (i) the conditions for equilibrium determinacy and (ii) the e¤ects of exogenous government spending variations.

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A Case for Interest Rate Inertia in Monetary Policy

Bask

2012

Int. J. Fin. Econ.

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: We argue that it is not necessary for the central bank to react to the exchange rate to have a desirable outcome in the economy. Indeed, when the Taylor rule includes contemporaneous data on the variables in the rule, the central bank can disregard from the exchange rate as long as there is enough with interest rate inertia in monetary policy. The reason is that interest rate inertia and a reaction to the current nominal exchange rate change are perfect substitutes in monetary policy. Hence, we give a rationale for the central bank to focus on the interest rate change rather than the interest rate level to have a desirable outcome in the economy, which we define as a determinate rational expectation equilibrium that is stable under least squares learning. Terms of use: Documents inJEL codes: E52; F31.

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Learning about monetary policy rules

Cited by 685 publications

References 19 publications

Robustifying learnability

Robustifying learnability

Optimal Monetary and Fiscal Policy in a Currency Union

A Case for Interest Rate Inertia in Monetary Policy

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