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Learning The Inflation Target

Praca Cavaco Nunes, Ricardo (2009) Learning The Inflation Target Macroeconomic Dynamics, 13 (2). pp. 167-188.

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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.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > School of Economics
Authors :
Praca Cavaco Nunes,
Date : 2009
DOI : 10.1017/S136510050807051X
Copyright Disclaimer : © Cambridge University Press 2009
Depositing User : Melanie Hughes
Date Deposited : 10 Oct 2017 17:47
Last Modified : 16 Jan 2019 18:57

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