Performance of Monetary Policy with Internal Central Bank Forecasting

Honkapohja, Seppo; Mitra, Kaushik

doi:10.2139/ssrn.357325

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Performance of Monetary Policy with Internal Central Bank Forecasting

54 Pages Posted: 14 Jan 2003

See all articles by Seppo Honkapohja

Seppo Honkapohja

Centre for Economic Policy Research (CEPR); Aalto University School of Business; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Aalto University - School of Business

Kaushik Mitra

University of St. Andrews - School of Economics and Finance

Date Written: February 2002

Abstract

Recent models of monetary policy have analyzed the desirability of different optimal and ad hoc interest rules under the restrictive assumption that forecasts of the private sector and the central bank are homogenous. In this paper, we study the implications of heterogeneity in forecasts of the central bank and private agents for the performance of interest rules from the learning viewpoint.

Keywords: Adaptive Learning, Stability, Heterogeneity, Monetary Policy

JEL Classification: E52, E31, D84

Suggested Citation: Suggested Citation

Honkapohja, Seppo and Honkapohja, Seppo and Mitra, Kaushik, Performance of Monetary Policy with Internal Central Bank Forecasting (February 2002). Available at SSRN: https://ssrn.com/abstract=357325 or http://dx.doi.org/10.2139/ssrn.357325