Research Discussion Papers, Bank of Finland
No 3/2002:
Performance of monetary policy with internal central bank forecasting
Seppo Honkapohja and Kaushik Mitra
Abstract: Recent models of monetary policy have analysed the
desirability of different optimal and ad hoc interest-rate rules under the
restrictive assumption that forecasts of the private sector and central
bank are homogeneous. In this paper, we study from a learning perspective
the implications of heterogeneity across forecasts by the central bank and
private agents for the performance of interest-rate rules.
Keywords: adaptive learning; stability; heterogeneity; monetary policy; (follow links to similar papers)
JEL-Codes: D84; E31; E52; (follow links to similar papers)
47 pages, February 18, 2002
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