Arbeitspapier
Robust learning stability with operational monetary policy rules
We consider the robust stability of a rational expectations equilibrium, which we define as stability under discounted (constant gain) least-squares learning, for a range of gain parameters. We find that for operational forms of policy rules, ie rules that do not depend on contemporaneous values of endogenous aggregate variables, many interest-rate rules do not exhibit robust stability. We consider a variety of interest-rate rules, including instrument rules, optimal reaction functions under discretion or commitment, and rules that approximate optimal policy under commitment. For some reaction functions we allow for an interest-rate stabilization motive in the policy objective. The expectations-based rules proposed in Evans and Honkapohja (2003, 2006) deliver robust learning stability. In contrast, many proposed alternatives become unstable under learning even at small values of the gain parameter.
- ISBN
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978-952-462-411-4
- Sprache
-
Englisch
- Erschienen in
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Series: Bank of Finland Research Discussion Papers ; No. 31/2007
- Klassifikation
-
Wirtschaft
Monetary Policy
Price Level; Inflation; Deflation
Expectations; Speculations
- Thema
-
commitment
interest-rate setting
adaptive learning
stability
determinacy
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Evans, George W.
Honkapohja, Seppo
- Ereignis
-
Veröffentlichung
- (wer)
-
Bank of Finland
- (wo)
-
Helsinki
- (wann)
-
2007
- Handle
- Letzte Aktualisierung
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10.03.2025, 11:42 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Evans, George W.
- Honkapohja, Seppo
- Bank of Finland
Entstanden
- 2007
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