St Andrews Research Repository

St Andrews University Home
View Item 
  •   St Andrews Research Repository
  • University of St Andrews Research
  • University of St Andrews Research
  • University of St Andrews Research
  • View Item
  •   St Andrews Research Repository
  • University of St Andrews Research
  • University of St Andrews Research
  • University of St Andrews Research
  • View Item
  •   St Andrews Research Repository
  • University of St Andrews Research
  • University of St Andrews Research
  • University of St Andrews Research
  • View Item
  • Login
JavaScript is disabled for your browser. Some features of this site may not work without it.

Policy change and learning in the RBC model

Thumbnail
View/Open
JEDC.pdf (1.124Mb)
Date
10/2013
Author
Mitra, Kaushik
Evans, George W
Honkapohja, Seppo
Funder
Economic & Social Research Council
Grant ID
RES-062-23-2617
Keywords
Taxation
Government spending
Expectations
Permanent Policy Changes
HB Economic Theory
Metadata
Show full item record
Altmetrics Handle Statistics
Altmetrics DOI Statistics
Abstract
What is the impact of surprise and anticipated policy changes when agents form expectations using adaptive learning rather than rational expectations? We examine this issue using the standard stochastic real business cycle model with lump-sum taxes. Agents combine knowledge about future policy with econometric forecasts of future wages and interest rates. Both permanent and temporary policy changes are analyzed. Dynamics under learning can have large impact effects and a gradual hump-shaped response, and tend to be prominently characterized by oscillations not present under rational expectations. These fluctuations reflect periods of excessive optimism or pessimism, followed by subsequent corrections.
Citation
Mitra , K , Evans , G W & Honkapohja , S 2013 , ' Policy change and learning in the RBC model ' , Journal of Economic Dynamics and Control , vol. 37 , no. 10 , pp. 1947-1971 . https://doi.org/10.1016/j.jedc.2013.05.011
Publication
Journal of Economic Dynamics and Control
Status
Peer reviewed
DOI
https://doi.org/10.1016/j.jedc.2013.05.011
ISSN
0165-1889
Type
Journal article
Rights
This is a paid open access article.
Description
This work was supported by the Economic and Social Research Council (ESRC) [Grant number RES-062-23-2617]
Collections
  • University of St Andrews Research
URL
http://www.sciencedirect.com/science/article/pii/S0165188913001176
URI
http://hdl.handle.net/10023/3973

Items in the St Andrews Research Repository are protected by copyright, with all rights reserved, unless otherwise indicated.

Advanced Search

Browse

All of RepositoryCommunities & CollectionsBy Issue DateNamesTitlesSubjectsClassificationTypeFunderThis CollectionBy Issue DateNamesTitlesSubjectsClassificationTypeFunder

My Account

Login

Open Access

To find out how you can benefit from open access to research, see our library web pages and Open Access blog. For open access help contact: openaccess@st-andrews.ac.uk.

Accessibility

Read our Accessibility statement.

How to submit research papers

The full text of research papers can be submitted to the repository via Pure, the University's research information system. For help see our guide: How to deposit in Pure.

Electronic thesis deposit

Help with deposit.

Repository help

For repository help contact: Digital-Repository@st-andrews.ac.uk.

Give Feedback

Cookie policy

This site may use cookies. Please see Terms and Conditions.

Usage statistics

COUNTER-compliant statistics on downloads from the repository are available from the IRUS-UK Service. Contact us for information.

© University of St Andrews Library

University of St Andrews is a charity registered in Scotland, No SC013532.

  • Facebook
  • Twitter