Discussion Paper Details

Please find the details for DP2846 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Are Non-Fundamental Equilibria Learnable in Models of Monetary Policy?

Author(s): Seppo Honkapohja and Kaushik Mitra

Publication Date: June 2001

Keyword(s): Adaptive Learning, Monetary policy, Stability and Sunspots

Programme Area(s): International Macroeconomics

Abstract: Recent models of monetary policy can have indeterminacy of equilibria. The indeterminacy property is often viewed as a difficulty of these models. We consider its significance using the learning approach to expectations formation by employing expectational stability as a robustness criterion for different equilibria. We derive the expectational stability and instability conditions for forward-looking multivariate models, both with and without lags, that cover a wide range of monetary policies proposed in the literature.

For full details and related downloads, please visit:

Bibliographic Reference

Honkapohja, S and Mitra, K. 2001. 'Are Non-Fundamental Equilibria Learnable in Models of Monetary Policy?'. London, Centre for Economic Policy Research.