Abstract
The impact of anticipated policy changes when agents form expectations using adaptive learning rather than rational expectations is considered. Agents are assumed to combine limited structural knowledge with a standard adaptive learning rule. These issues are analyzed using two well-known set-ups, an endowment economy and the Ramsey model. In our scenario there are important deviations from both rational expectations and purely adaptive learning. The approach could be applied to other frameworks. (C) 2009 Elsevier B.V. All rights reserved.
Original language | English |
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Pages (from-to) | 930-953 |
Number of pages | 24 |
Journal | Journal of Monetary Economics |
Volume | 56 |
Issue number | 7 |
Early online date | 26 Sept 2009 |
DOIs | |
Publication status | Published - Oct 2009 |
Keywords
- Taxation
- Expectations
- Ramsey model
- MONETARY-POLICY
- RATIONAL-EXPECTATIONS
- DYNAMICS
- MODELS
- INFLATION
- STABILITY
- CRITIQUE
- GROWTH
- WEALTH
- RULES