Abstract
The impact of anticipated policy changes when agents form expectations using adaptive learning rather than rational expectations is considered. Agents are assumed to combine limited structural knowledge with a standard adaptive learning rule. These issues are analyzed using two well-known set-ups, an endowment economy and the Ramsey model. In our scenario there are important deviations from both rational expectations and purely adaptive learning. The approach could be applied to other frameworks.
| Original language | English |
|---|---|
| Pages (from-to) | 930-953 |
| Journal | Journal of Monetary Economics |
| Volume | 56 |
| Issue number | 7 |
| Early online date | 26 Sept 2009 |
| DOIs | |
| Publication status | Published - Oct 2009 |
Keywords
- Taxation
- Expectations
- Ramsey model
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