Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of Atlanta
FRB Atlanta Working Paper
Discussion of Preston, "Learning about monetary policy rules when long-horizon expectations matter"
Seppo Honkapohja
Abstract

The design of interest rate rules for conducting monetary policy have recently been examined for two key concerns. The first issue is determinacy of equilibria. Indeterminacy (multiplicity of stationary rational expectations equilibria) is a concern in models of monopolistic competition and price stickiness are currently a popular framework for the study of monetary policy. The second issue is stability of equilibria under adaptive learning. Some interest rate rules do not perform well when the expectations of the agents get out of equilibrium, e.g. as a result of structural shifts.


Download Full text
Cite this item
Seppo Honkapohja, Discussion of Preston, "Learning about monetary policy rules when long-horizon expectations matter", Federal Reserve Bank of Atlanta, FRB Atlanta Working Paper 2003-19, 2003.
More from this series
JEL Classification:
Subject headings:
Keywords: Equilibrium (Economics) ; Monetary policy ; Macroeconomics
For corrections, contact Elaine Clokey ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal