Social Learning and Monetary Policy Rules

39 Pages Posted: 27 Feb 2013

See all articles by Jasmina Arifovic

Jasmina Arifovic

Simon Fraser University (SFU) - Department of Economics

James Bullard

Federal Reserve Banks - Federal Reserve Bank of St. Louis

Olena Kostyshyna

Simon Fraser University (SFU)

Multiple version iconThere are 2 versions of this paper

Date Written: March 2013

Abstract

We analyse the effects of social learning in a monetary policy context. Social learning might be viewed as more descriptive of actual learning behaviour in complex market economies. In our model, Taylor Principle governs uniqueness and expectational stability of rational expectations equilibrium (REE) under homogeneous recursive algorithms. We find that the Taylor Principle is not necessary for convergence to REE minimum state variable (MSV) equilibrium under social learning. Sunspot equilibria exist in the indeterminate region. Our agents cannot co‐ordinate on a sunspot equilibrium in general form specification, however, they can co‐ordinate on common factor specification. We contribute to the use of genetic algorithm learning in stochastic environments.

Suggested Citation

Arifovic, Jasmina and Bullard, James and Kostyshyna, Olena, Social Learning and Monetary Policy Rules (March 2013). The Economic Journal, Vol. 123, Issue 567, pp. 38-76, 2013. Available at SSRN: https://ssrn.com/abstract=2225655 or http://dx.doi.org/10.1111/j.1468-0297.2012.02525.x

Jasmina Arifovic (Contact Author)

Simon Fraser University (SFU) - Department of Economics ( email )

8888 University Drive
Burnaby, British Columbia V5A 1S6
Canada
604-291-3508 (Phone)
604-291-5944 (Fax)

James Bullard

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

P.O. Box 442
411 Locust Street
St. Louis, MO 63166
United States
314-444-8576 (Phone)

Olena Kostyshyna

Simon Fraser University (SFU) ( email )

8888 University Drive
Burnaby, British Columbia V5A 1S6
Canada

Register to save articles to
your library

Register

Paper statistics

Downloads
2
Abstract Views
883
PlumX Metrics