nep-dge New Economics Papers
on Dynamic General Equilibrium
Issue of 2016‒01‒03
23 papers chosen by
Christian Zimmermann
Federal Reserve Bank of St. Louis

  1. Short- and Long-Run Tradeoff Monetary Easing By Koki Oikawa; Kozo Ueda
  2. Declining Trends in the Real Interest Rate and Inflation: Role of aging By FUJITA Shigeru; FUJIWARA Ippei
  3. Inter-sectoral Labor Immobility, Sectoral Co-movement, and News Shocks By Munechika Katayama; Kwang Hwan Kim
  4. Sovereign Default Risk and Uncertainty Premia By Demian Pouzo; Ignacio Presno
  5. International Transmission of Bubble Crashes in a Two-Country Overlapping Generations By Lise Clain-Chamosset-Yvrard; Takashi Kamihigashi
  6. Cross-border banking and business cycles in asymmetric currency unions By Dräger, Lena; Proaño, Christian R.
  7. Macroprudential policy and forecasting using Hybrid DSGE models with financial frictions and State space Markov-Switching TVP-VARs By Stelios D. Bekiros; Alessia Paccagnini
  8. The Political Economy of Growth, Inequality, the Size and Composition of Government Spending By Klaus Schmidt-Hebbel; José Carlos Tello
  9. Financial Integration and Growth in a Risky World By Coeurdacier, Nicolas; Rey, Hélène; Winant, Pablo
  10. Ramsey Equilibrium with Liberal Borrowing By Robert A. Becker; Kirill Borissov; Ram Sewak Dubey
  11. Dynamic Effects of Monetary Policy Shocks on Macroeconomic Volatility By Konstantinos Theodoridis; Haroon Mumtaz
  12. Macroprudential Policy in a DSGE Model: anchoring the countercyclical capital buffer By Leonardo Nogueira Ferreira; Márcio Issao Nakane
  13. Informal versus Formal Search: Which Yields a Better Pay? By Tumen, Semih
  14. Individual and Aggregate Constrained Efficient Intertemporal Wedges in Dynamic Mirrleesian Economies By Chen, Yunmin; Chien, YiLi; Yang, C.C.
  15. Macro Credit Policy and the Financial Accelerator By Carlstrom, Charles T.; Fuerst, Timothy S.
  16. Changes in nominal rigidities in Poland – a regime switching DSGE perspective By Pawel Baranowski; Zbigniew Kuchta
  17. Floor systems and the Friedman rule: the fiscal arithmetic of open market operations By Keister, Todd; Martin, Antoine; McAndrews, James J.
  18. Technological Progress, Employment and the Lifetime of Capital By Raouf Boucekkine; Natali Hritonenko; Yuri Yatsenko
  19. Credit Frictions and Optimal Monetary Policy By Cúrdia, Vasco; Woodford, Michael
  20. Managers and Productivity Differences By Guner, Nezih; Parkhomenko, Andrii; Ventura, Gustavo
  21. Exact Present Solution with Consistent Future Approximation: A Gridless Algorithm to Solve Stochastic Dynamic Models By Den Haan, Wouter; Kobielarz, Michal L.; Rendahl, Pontus
  22. Social Health Insurance: A Quantitative Exploration By Juergen Jung; Chung Tran
  23. Central bank accountability under adaptive learning. By Marine Charlotte André; Meixing Dai

  1. By: Koki Oikawa (Waseda University); Kozo Ueda (School of Political Science and Economics, Waseda University and Centre for Applied Macroeconomic Analysis (CAMA))
    Abstract: In this study, we illustrate a tradeoff between the short-run positive and long-run negative effects of monetary easing by using a dynamic stochastic general equilibrium model embedding endogenous growth with creative destruction and sticky prices due to menu costs. While a monetary easing shock increases the level of consumption because of price stickiness, it lowers the frequency of creative destruction (i.e., product substitution) because inflation reduces the reward for innovation via menu cost payments. The model calibrated to the U.S. economy suggests that the adverse effect dominates in the long run.
    Keywords: Schumpeterian; new Keynesian; non-neutrality of money
    JEL: E31 E58 O33 O41
    Date: 2015–11
  2. By: FUJITA Shigeru; FUJIWARA Ippei
    Abstract: This paper explores a causal link between the aging of the labor force and declining trends in the real interest rate and inflation in Japan. We develop a new Keynesian search/matching model that features heterogeneities in age and firm-specific skill levels. Using the model, we examine the long-run implications of the sharp drop in labor force entry in the 1970s. We show that the changes in the demographic structure driven by the drop induce significant low-frequency movements in per-capita consumption growth and the real interest rate. They also lead to similar movements in the inflation rate when the monetary policy rule follows the standard Taylor rule, failing to recognize the time-varying nature of the natural rate of interest. The model suggests that the aging of the labor force accounts for roughly 40% of the decline in the real interest rate observed between the 1980s and 2000s in Japan.
    Date: 2015–12
  3. By: Munechika Katayama; Kwang Hwan Kim
    Abstract: The sectoral co-movement of output and hours worked is a prominent feature of business cycle data. However, most two-sector neoclassical models fail to generate this sectoral comovement. We construct and estimate a two-sector neoclassical DSGE model that generates the sectoral co-movement in response to both anticipated and unanticipated shocks. The key to our modelfs success is a significant degree of inter-sectoral labor immobility, which we estimate using data on sectoral hours worked. Furthermore, we demonstrate that imperfect inter-sectoral labor mobility provides a better explanation for the sectoral co-movement than some alternative model emphasizing the role of labor-supply wealth e?ects.
    Keywords: Sectoral Co-movement; Labor Immobility; Non-separable Preferences; Unanticipated; Shocks; News Shocks.
    JEL: E32 E13
    Date: 2015–12
  4. By: Demian Pouzo; Ignacio Presno
    Abstract: This paper studies how international investors' concerns about model misspecification affect sovereign bond spreads. We develop a general equilibrium model of sovereign debt with endogenous default wherein investors fear that the probability model of the underlying state of the borrowing economy is misspecified. Consequently, investors demand higher returns on their bond holdings to compensate for the default risk in the context of uncertainty. In contrast with the existing literature on sovereign default, we match the bond spreads dynamics observed in the data together with other business cycle features for Argentina, while preserving the default frequency at historical low levels.
    Date: 2015–12
  5. By: Lise Clain-Chamosset-Yvrard (Aix-Marseille University (Aix-Marseille School of Economics) and CNRS-GREQAM & EHESS, France); Takashi Kamihigashi (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: We study the international transmission of bubble crashes by analyzing stationary sunspot equilibria in a two-country overlapping generations exchange economy with stochastic bubbles. We consider two cases of sunspot shocks. In the first case, we assume that only the foreign country receives a sunspot shock, while in the second, we assume that both countries independently receive sunspot shocks. In the first case, a bubble crash in the foreign country is always accompanied by a bubble crash in the home country. In the second case, a bubble crash in the foreign country can have a positive or negative effect on the home bubble. We also show that there exists a unique locally isolated stationary sunspot equilibrium, and that it is locally unstable.
    Keywords: International transmission, Stochastic bubbles, Stationary sunspot equilibria, Financial integration
    JEL: D91 E44 F30
    Date: 2015–12
  6. By: Dräger, Lena; Proaño, Christian R.
    Abstract: Against the background of the emergence of macroeconomic imbalances within the European Monetary Union (EMU), we investigate in this paper the macroeconomic consequences of cross-border banking in monetary unions such as the euro area. For this purpose, we incorporate in an otherwise standard two-region monetary union DSGE model a global banking sector along the lines of Gerali et al. (2010), accounting for borrowing constraints of entrepreneurs and an internal constraint on the bank's leverage ratio. We illustrate in particular how rule-of-thumb lending standards based on the macroeconomic performance of the dominating region within the monetary union can translate into destabilizing spill-over effects into the other region, resulting in an overall higher macroeconomic volatility. Thereby, we demonstrate a channel through which the financial sector may have exacerbated the emergence of macroeconomic imbalances within the EMU. This effect may be partly mitigated if the central bank reacts to loan rate spreads, at least relative to the case with constant lending standards.
    Keywords: cross-border banking,euro area,monetary unions,DSGE,monetary policy
    JEL: F41 F34 E52
    Date: 2015
  7. By: Stelios D. Bekiros; Alessia Paccagnini
    Abstract: We focus on the interaction of frictions both at the firm level and in the banking sector in order to examine the transmission mechanism of the shocks and to reflect on the response of the monetary policy to increases in interest rate spreads, using DSGE models with financial frictions. However, VAR models are linear and the solutions of DSGEs are often linear approximations; hence they do not consider time variation in parameters that could account for inherent nonlinearities and capture the adaptive underlying structure of the economy, especially in crisis periods. A novel method for time-varying VAR models is introduced. As an extension to the standard homoskedastic TVP-VAR, we employ a Markov-switching heteroskedastic error structure. Overall, we conduct a comparative empirical analysis of the out-of-sample performance of simple and hybrid DSGE models against standard VARs, BVARs, FAVARs, and TVP-VARs, using data sets from the U.S. economy. We apply advanced Bayesian and quasi-optimal filtering techniques in estimating and forecasting the models.
    Keywords: Financial frictions; Time-varying coefficients; Quasi-optimal filtering
    Date: 2015–10
  8. By: Klaus Schmidt-Hebbel; José Carlos Tello
    Abstract: This paper develops a dynamic general-equilibrium political-economy model for the optimal size and composition of public spending. An analytical solution is derived from majority voting for three government spending categories: public consumption goods and transfers (valued by households), as well as productive government services (complementing private capital in an endogenous-growth technology). Inequality is reflected by a discrete distribution of infinitely-lived agents that differ by their initial capital holdings. In contrast to the previous literature that derives monotonic (typically negative) relations between inequality and growth in one-dimensional voting environments, this paper establishes conditions, in an environment of multi-dimensional voting, under which a non-monotonic, inverted U-shape relation between inequality and growth is obtained. This more general result – that inequality and growth could be negatively or positively related – could be consistent with the ambiguous or inconclusive results documented in the empirical literature on the inequality-growth nexus. The paper also shows that the political-economy equilibrium obtained under multi-dimensional voting for the initial period is time-consistent.
    JEL: D72 E62 H11 H31
    Date: 2014
  9. By: Coeurdacier, Nicolas; Rey, Hélène; Winant, Pablo
    Abstract: We revisit the debate on the benefits of financial integration in a two-country neoclassical growth model with aggregate uncertainty. Our framework accounts simultaneously for gains from a more efficient capital allocation and gains from risk sharing---together with their interaction. In our general equilibrium model, risk sharing brought by financial integration has an effect on the steady-state itself, altering convergence gains from capital accumulation. Because we use global numerical methods, we are able to do meaningful welfare comparisons along the transition paths. Allowing for country asymmetries in terms of risk, capital scarcity and size, we find important differences in the effect of financial integration on output, direction of capital flows, consumption and welfare over time and across countries. This opens the door to a richer set of empirical implications than previously considered in the literature.
    Keywords: Growth; International capital flows; Risk sharing
    JEL: F21 F3 F43
    Date: 2015–12
  10. By: Robert A. Becker; Kirill Borissov; Ram Sewak Dubey
    Abstract: This paper considers a multi-agent one-sector Ramsey equilibrium growth model with borrowing constraints. The extreme borrowing constraint used in the classical version of the model, surveyed in Becker (2006), and the limited form of borrowing constraint examined in Borissov and Dubey (2015) are relaxed to allow more liberal borrowing by the households. A perfect foresight equilibrium is shown to exist in this economy. Each equilibrium’s aggregate capital stock sequence is eventually monotonic and is shown to converge to the unique stationary equilibrium capital stock and the impatient households are eventually in the maximum borrowing state and remain so for all subsequent periods, whereas the most patient household eventually owns the entire capital stock and the other households debts. This convergence result is unlike the possibility of non-convergent equilibrium capital stock sequences in the model with no borrowing and like the equilibrium outcomes in the model with limited borrowing. Here, the convergence theorem is independent of the production technology employed by the firms. As the borrowing regime is progressively liberalized, the Gini coefficient of steady state wealth distribution increases.
    Keywords: convergence, existence, Gini coefficient, growth, heterogeneous agent, liberal borrowing, turnpike property
    JEL: C61 D61 D90 O41
    Date: 2015–05–19
  11. By: Konstantinos Theodoridis; Haroon Mumtaz
    Abstract: We use a simple New Keynesian model, with firm specific capital, non-zero steady-state inflation, long-run risks and Epstein-Zin preferences to study the volatility implications of a monetary policy shock. An unexpected increase in the policy rate by 150 basis points causes output and inflation volatility to rise around 10% above their steady-state standard deviations. VAR based empirical results support the model implications that contractionary shocks increase volatility. The volatility effects of the shock are driven by agents' concern about the (in) ability of the monetary authority to reverse deviations from the policy rule and the results are re-enforced by the presence of non-zero trend inflation.
    Keywords: DSGE, Non-Linear SVAR, New Keynesian, Non-Zero Steady State Inflation, Epstein-Zin preferences, Stochastic Volatility
    JEL: E30 E40 E52 C11 C13 C15 C50
    Date: 2015
  12. By: Leonardo Nogueira Ferreira; Márcio Issao Nakane
    Abstract: The 2007-8 world financial crisis highlighted the deficiency of the regulatory framework in place at the time. Thenceforth many papers have been assessing the introduction of macroprudential policy in a DSGE model. However, they do not focus on the choice of the variable to which the macroprudential instrument must respond - the anchor variable. In order to fulfil this gap, we input different macroprudential rules into the DSGE with a banking sector proposed by Gerali et al. (2010), and estimate its key parameters using Bayesian techniques applied to Brazilian data. We then rank the results using the unconditional expectation of lifetime utility as of time zero as the measure of welfare: the larger the welfare, the better the anchor variable. We find that credit growth is the variable that performs best.
    Keywords: Macroprudential Policy; Basel III; Capital Buffer; Anchor Variable
    JEL: E3 E5
    Date: 2015–12–02
  13. By: Tumen, Semih (Central Bank of Turkey)
    Abstract: Estimates on the effect of job contact method – i.e., informal versus formal search – on wage offers vary considerably across studies, with some of them finding a positive correlation between getting help from informal connections and obtaining high-paying jobs, while others finding a negative one. In this paper, I theoretically investigate the sources of discrepancies in these empirical results. Using a formal job search framework, I derive an equilibrium wage distribution which reveals that the informal search yields for some groups higher and for some others lower wages than formal search. The key result is the existence of nonmonotonicities in wage offers. Two potential sources of these nonmonotonicities exist: (i) peer effects and (ii) unobserved worker heterogeneity in terms of the inherent cost of maintaining connections within a productive informal network. The model predicts that a greater degree of unobserved heterogeneity tilts the estimates toward producing a positive correlation between informal search and higher wages, whereas stronger peer influences tend to yield a negative correlation. This conclusion informs the empirical research in the sense that identification of the true correlation between job contact methods and wage offers requires a careful assessment of the unobserved heterogeneity and peer influences in the relevant sample.
    Keywords: heterogeneity, peer effects, informal networks, job search, nonmonotonicities
    JEL: D85 J31 J64
    Date: 2015–12
  14. By: Chen, Yunmin (Institute of Economics, Academia Sinica); Chien, YiLi (Federal Reserve Bank of St. Louis); Yang, C.C. (Institute of Economics, Academia Sinica)
    Abstract: Assuming a neoclassical production technology, this paper characterizes constrained efficient intertemporal wedges for the macro aggregate as well as the micro individual allocation of dynamic Mirrleesian economies. We first construct “Pareto-Negishi weights” from the multipliers on a sequence of temporary incentive constraints. For a fairly general stochastic process of idiosyncratic productivity shocks, we show that the evolution of the Pareto-Negishi weight associated with agents’ consumption is a nonnegative martingale. This powerful property enables us to deliver three contributions to the literature. First, we demonstrate that several celebrated constrained efficient intertemporal results of the individual allocation in the literature can be all attributed to originating from the nonnegative martingale property of consumption Pareto-Negishi weights. Second, we address optimal distortion for the aggregate allocation and establish that the constrained efficient intertemporal wedge for aggregate saving will be negative or positive, depending on whether the intertemporal elasticity of substitution is elastic or inelastic. This result is another application of the nonnegative martingale property. Third, we show how the nonnegative martingale property is modified in the presence of additional frictions and shed new light on incorporating different types of constraints documented in the literature.
    Keywords: Intertemporal wedges; Nonnegative martingale; Inverse Euler equation; Immiseration
    JEL: D82 E21 H21
    Date: 2015–12–21
  15. By: Carlstrom, Charles T. (Federal Reserve Bank of Cleveland); Fuerst, Timothy S. (Federal Reserve Bank of Cleveland)
    Abstract: This paper studies macro credit policies within the celebrated financial accelerator model of Bernanke, Gertler and Gilchrist (1999). The focus is on borrower-based restrictions on lending such as loan-to-value (LTV) ratios. We find that the efficacy of cyclical taxes on LTV ratios depends upon the nature of the underlying loan contract. If the loan contract contains equity-like features such as indexation to aggregate conditions, then there is little role for cyclical taxation. But if the loan contract is not indexed to aggregate conditions, then there are substantial gains to procyclical taxes on LTV ratios.
    Keywords: credit policy; loan-to-value ratios; borrower-based lending restrictions
    JEL: C68 E44 E61
    Date: 2015–12–21
  16. By: Pawel Baranowski (Faculty of Economics and Sociology, University of Lodz); Zbigniew Kuchta (Faculty of Economics and Sociology, University of Lodz)
    Abstract: In this paper, we estimate Erceg, Henderson and Levin’s [2000] sticky price and sticky wage dynamic stochastic general equilibrium (DSGE) model while allowing for wage or price Calvo parameters regime switching and compare this with the constant parameters model. Our results suggest that the model with price and wage rigidity switching is strongly favored by the data. However, we do not find significant evidence in support of independent Markov chains. Moreover, we identify historical periods when price and wage stickiness were low and show that during such periods, the economy reacts more strongly to structural shocks.
    Keywords: nominal rigidities, Markov-switching DSGE models, Bayesian model comparison, regime switching.
    JEL: C11 E31 E32 J30 P22
    Date: 2015–12
  17. By: Keister, Todd (Rutgers University and Paris School of Economics); Martin, Antoine (Federal Reserve Bank of New York); McAndrews, James J. (Federal Reserve Bank of New York)
    Abstract: In a floor system of monetary policy implementation, the central bank remunerates bank reserves at or near the market rate of interest. Some observers have expressed concern that operating such a system will have adverse fiscal consequences for the public sector and may even require the government to subsidize the central bank. We show that this is not the case. Using the monetary general equilibrium model of Berentsen et al. (2014), we show how a central bank that supplies reserves through open market operations can always generate non-negative net income, even when using a floor system to implement the Friedman rule.
    Keywords: monetary policy implementation; central bank operations; interest on reserves
    JEL: E42 E52 E58
    Date: 2015–12–01
  18. By: Raouf Boucekkine (Aix-Marseille University (Aix-Marseille School of Economics), CNRS and EHESS); Natali Hritonenko (Prairie View A&M University, USA); Yuri Yatsenko (Houston Baptist University, USA)
    Abstract: We study the impact of technological progress on the level of employment in a vintage capital model where: i) capital and labor are gross complementary; ii) labor supply is endogenous and indivisible; iii) there is full employment, and iv) the rate of labor-saving technological progress is endogenous. We characterize the stationary distributions of vintage capital goods and the corresponding equilibrium values for employment and capital lifetime. It is shown that both variables are non-monotonic functions of technological progress indicators. Technological accelerations are found to increase employment provided innovations are not too radical.
    Keywords: Vintage capital, Technological progress, Employment, Compensation theory
    Date: 2015–12
  19. By: Cúrdia, Vasco; Woodford, Michael
    Abstract: We extend the basic (representative-household) New Keynesian [NK] model of the monetary transmission mechanism to allow for a spread between the interest rate available to savers and borrowers, that can vary for either exogenous or endogenous reasons. We find that the mere existence of a positive average spread makes little quantitative difference for the predicted effects of particular policies. Variation in spreads over time is of greater significance, with consequences both for the equilibrium relation between the policy rate and aggregate expenditure and for the relation between real activity and inflation. Nonetheless, we find that the target criterion—a linear relation that should be maintained between the inflation rate and changes in the output gap—that characterizes optimal policy in the basic NK model continues to provide a good approximation to optimal policy, even in the presence of variations in credit spreads. Such a flexible inflation target" can be implemented by a central-bank reaction function that is similar to a forward-looking Taylor rule, but adjusted for changes in current and expected future credit spreads
    Keywords: credit spreads; flexible inflation targeting; policy rules; quadratic loss function; target criterion
    JEL: E44 E52
    Date: 2015–12
  20. By: Guner, Nezih (MOVE, Barcelona); Parkhomenko, Andrii (Universitat Autònoma de Barcelona); Ventura, Gustavo (Arizona State University)
    Abstract: We document that for a group of high-income countries (i) mean earnings of managers tend to grow faster than for non managers over the life cycle; (ii) the earnings growth of managers relative to non managers over the life cycle is positively correlated with output per worker. We interpret this evidence through the lens of an equilibrium life-cycle, span-of-control model where managers invest in their skills. We parameterize this model with U.S. observations on managerial earnings, the size-distribution of plants and macroeconomic aggregates. We then quantify the relative importance of exogenous productivity differences, and the size-dependent distortions emphasized in the misallocation literature. Our findings indicate that such distortions are critical to generate the observed differences in the growth of relative managerial earnings across countries. Thus, observations on the relative earnings growth of managers become natural targets to discipline the level of distortions. Distortions that halve the growth of relative managerial earnings (a move from the U.S. to Italy in our data), lead to a reduction in managerial quality of 27% and to a reduction in output of about 7% – more than half of the observed gap between the U.S. and Italy. We find that cross-country variation in distortions accounts for about 42% of the cross-country variation in output per worker gap with the U.S.
    Keywords: managers, management practices, distortions, size, skill investments, productivity differences
    JEL: E23 E24 J24 M11 O43 O47
    Date: 2015–12
  21. By: Den Haan, Wouter; Kobielarz, Michal L.; Rendahl, Pontus
    Abstract: This paper proposes an algorithm that finds model solutions at a particular point in the state space by solving a simple system of equations. The key step is to characterize future behavior with a Taylor series expansion of the current period's behavior around the contemporaneous values for the state variables. Since current decisions are solved from the original model equations, the solution incorporates nonlinearities and uncertainty. The algorithm is used to solve the model considered in Coeurdacier, Rey, and Winant (2011), which is a challenging model because it has no steady state and uncertainty is necessary to keep the model well behaved. We show that our algorithm can generate accurate solutions even when the model series are quite volatile. The solutions generated by the risky-steady-state algorithm proposed in Coeurdacier, Rey, and Winant (2011), in contrast, is shown to be not accurate.
    Keywords: risky steady state; solution methods
    JEL: C63 E10 E23 F41
    Date: 2015–12
  22. By: Juergen Jung; Chung Tran
    Abstract: We quantify the welfare implications of three alternative approaches to providing social health insurance: (i) a mix of private and public health insurance (US-style), (ii) compulsory universal public health insurance (UPHI), and (iii) private health insurance for workers combined with government subsidies and price regulation. We use a Bewley-Grossman lifecycle model calibrated to match the lifecycle structure of earnings and health risks in the US. For all three systems we find that welfare gains triggered by a combination of improvements in risk sharing and wealth redistribution dominate welfare losses caused by tax distortions and ex-post moral hazard effects. Overall, the UPHI system outperforms the other two systems in terms of welfare gains if the coinsurance rate is properly designed. A switch from the US system to a well-designed UPHI system results in large welfare gains. However, such a radical reform faces political impediments due to opposing welfare effects across different income groups.
    Keywords: Health capital, lifecycle health risk, incomplete insurance markets, social insurance, optimal policy, dynamic general equilibrium with idiosyncratic shocks
    JEL: I13 D52 E62 H31
    Date: 2015–12
  23. By: Marine Charlotte André; Meixing Dai
    Abstract: Using a New Keynesian model, we examine the accountability issue in a delegation framework where private agents form expectations through adaptive learning while the central bank is rational and optimally sets monetary policy under discretion. Learning gives rise to an incentive for the central bank to accommodate less the effect of inflation expectations and cost-push shocks on inflation and induces thus a deviation of endogenous variables from rational expectations equilibrium. To help the central bank to better manage the intratemporal tradeoff, the government should nominate a liberal central banker, i.e., set a negative optimal inflation penalty according to the value of learning coefficient. By reducing the deviation of the feedback effects of inflation expectations and cost-push shocks on inflation and the output gap from the corresponding ones under rational expectations, the optimal inflation penalty allows the economy to be more efficient and improves the social welfare. The main conclusions are valid under both constant- and decreasing-gain learning.
    Keywords: Adaptive learning, optimal monetary policy, accountability, inflation penalty, rational expectations.
    JEL: E42 E52 E58
    Date: 2015

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