Anticipated fiscal policy and adaptive learning

George W Evans, Seppo Honkapohja, Kaushik Mitra

    Research output: Contribution to journalArticlepeer-review

    27 Citations (Scopus)

    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 languageEnglish
    Pages (from-to)930-953
    Number of pages24
    JournalJournal of Monetary Economics
    Volume56
    Issue number7
    Early online date26 Sept 2009
    DOIs
    Publication statusPublished - Oct 2009

    Keywords

    • Taxation
    • Expectations
    • Ramsey model
    • MONETARY-POLICY
    • RATIONAL-EXPECTATIONS
    • DYNAMICS
    • MODELS
    • INFLATION
    • STABILITY
    • CRITIQUE
    • GROWTH
    • WEALTH
    • RULES

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