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- Title
LEARNING THE INFLATION TARGET.
- Authors
Ricardo Nunes
- Abstract
We propose a framework in which expectations have a rational and a learning component. We describe a solution method for these frameworks and provide an application to the Volcker disinflation with the New Keynesian model. Although the model with rational expectations does not seem to account for this episode, results improve when a small and empirically plausible proportion of private agents are learning. The learning component is argued to be more robust and plausible than the rule-of-thumb expectations present in the hybrid Phillips curve.
- Subjects
PRICE inflation; ECONOMETRICS; PRICE deflation; KEYNESIAN economics; PHILLIPS curve; MACROECONOMICS
- Publication
Macroeconomic Dynamics, 2009, Vol 13, Issue 2, p167
- ISSN
1365-1005
- Publication type
Article
- DOI
10.1017/S136510050807051X