Learning , monetary policy rules , and macroeconomic stability

@inproceedings{Milani2008LearningM,
  title={Learning , monetary policy rules , and macroeconomic stability},
  author={Fabio Milani},
  year={2008}
}
Several papers have documented a regime switch in US monetary policy from ‘passive’ and destabilizing in the pre-1979 period to ‘active’ and stabilizing afterwards. These studies typically work with DSGE models with rational expectations. This paper relaxes the assumption of rational expectations and allows for learning instead. Economic agents form expectations from simple models and update the parameters through constant-gain learning. In this setting, the paper aims to test whether monetary… CONTINUE READING

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