Simplicity versus optimality: The choice
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Robert J. Tetlow; Peter von zur Muehlen
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Article
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2001
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Elsevier Science
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English
β 284 KB
The normal assumption of full information is dropped and the choice of monetary policy rules is instead examined when private agents must learn the rule. A small, forward-looking model is estimated and stochastic simulations conducted with agents using discounted least squares to learn of a change o