Adaptive Learning and Central Bank Inattentiveness in Optimal Monetary Policy

摘要: This paper analyzes the dynamic properties of a standard New Keynesian monetary policy model in which private agents expectations are formed under learning mechanism while central bank believes they follow hypothesis rational expectations. By assuming gain sequence that is asymptotically constant, explicit local and global stability conditions derived. The main results guaranteed even cases full convergence to equilibrium not attainable; furthermore, endogenous business cycles likely arise.