Abstract
Recent models of monetary policy can have indeterminacy of equilibria. which is often viewed as a difficulty of these models. We consider the significance of indeterminacy using (he learning approach to expectations formation. We employ expeciational stability as a selection criterion for different equilibria and derive the expeciational stability and instability, conditions for forward-looking multivariate models. both without and with lags. The results are applied to several monetary policies. (C) 2004 Elsevier B.V. All rights reserved.
| Original language | English |
|---|---|
| Pages (from-to) | 1743-1770 |
| Number of pages | 28 |
| Journal | Journal of Monetary Economics |
| Volume | 51 |
| Issue number | 8 |
| DOIs | |
| Publication status | Published - Nov 2004 |
Keywords
- adaptive learning
- stability
- sunspots
- monetary policy
- MULTIPLE-SOLUTION INDETERMINACIES
- SUNSPOT EQUILIBRIA
- RATIONAL-EXPECTATIONS
- STEADY-STATE
- STABILITY
- RULES
- INFLATION
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