Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5099665 | Journal of Economic Dynamics and Control | 2010 | 28 Pages |
Abstract
We conclude that the movement away from fear of floating may not be explained by Bayesian or Robust policies. When the private sector anticipates the Central Bank's policy and endogenously determines the model, Central Banks may fall in a learning trap. An increase in financial volatility provides an escape to such trap that replicates patterns in the data.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Saki Bigio,