Should monetary policy respond to private sector expectations?

Berardi, Michele (2008): Should monetary policy respond to private sector expectations? Forthcoming in: Central Banking and Globalization

Abstract

This work analyses the implications, in terms of determinacy and E-stability of equilibrium, of a policy rule that responds to private sector expectations in forward looking models. In the literature, this type of policy has been both recommended and criticized. We try to understand the reasons for such di¤erent conclusions and shed some light on the desirability of this type of policy rules.

• Item Type: MPRA Paper
• Language: English
• Keywords: Monetary policy; expectations; learning; determinacy; E- stability.
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D84 - Expectations ; Speculations; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C62 - Existence and Stability Conditions of Equilibrium

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