We study macroeconomic systems with forward-looking private sector agents and a monetary authority that is trying to control the economy through the use of a linear policy feedback rule. We use stability under recursive learning a la Evans and Honkapohja (Learning and Expectations in Macroeconomics, Princeton University Press, Princeton, New Jersey, 2001) as a criterion for evaluating monetary policy rules in this context. We find that considering learning can alter the evaluation of alternative policy rules.
|Journal||Journal of Monetary Economics|
|Early online date||30 Aug 2002|
|Publication status||Published - Sept 2002|
- Monetary policy rules
- Expectational stability
- Optimal monetary policy