Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5098791 | Journal of Economic Dynamics and Control | 2013 | 31 Pages |
Abstract
Diverse beliefs alter the problem faced by a central bank since the source of fluctuations is not only exogenous shocks but also market expectations. Due to diverse beliefs the effects of policy instruments are not monotonic and the trade-off between inflation and output volatilities is complex. Also, monetary policy can counter the effects of market belief by aggressive anti-inflation policy but at the cost of increased volatility of financial markets and individual consumption.
Keywords
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Mordecai Kurz, Giulia Piccillo, Howei Wu,