Show simple item record

dc.contributor.authorGABALLO, Gaetano
dc.date.accessioned2011-08-03T08:50:28Z
dc.date.available2011-08-03T08:50:28Z
dc.date.issued2011-01-01
dc.identifier.issn1830-7728
dc.identifier.urihttp://hdl.handle.net/1814/18275
dc.description.abstractIn an otherwise unique-equilibrium model, agents are segmented into a few informational islands according to the signal they receive about others' expectations. Even if agents perfectly observe fundamentals, rational-exuberance equilibria (REX) can arise as they put weight on expectational signals to refine their forecasts. Constant-gain adaptive learning can trigger jumps between the equilibrium where only fundamentals are weighted and a REX. This determines regime switching in aggregate volatility despite unchanged monetary policy and time-invariant distribution of exogenous shocks. In this context, a thigh inflation-targeting policy can lower expectational complementarity preventing rational exuberance, although its effect is non-monotone.en
dc.format.mimetypeapplication/pdf
dc.language.isoenen
dc.relation.ispartofseriesEUI MWPen
dc.relation.ispartofseries2011/19en
dc.rightsinfo:eu-repo/semantics/openAccess
dc.subjectNon-fundamental volatilityen
dc.subjectperpetual learningen
dc.subjectcomovements in expectationsen
dc.subjectprofessional forecastersen
dc.subjectE3en
dc.subjectE5en
dc.subjectD8en
dc.titleGood Luck or Good Policy? An expectational theory of macro volatility switchesen
dc.typeWorking Paperen
eui.subscribe.skiptrue


Files in this item

Icon

This item appears in the following Collection(s)

Show simple item record