Monetary policy, judgment and near-rational exuberance
By: by James B. Bullard, George W. Evans, and Seppo Honkapohja.
Contributors: Evans, George W., 1949-; Honkapohja, Seppo, 1951-
Series: Working paper -- 2007-008A; Working paper (Federal Reserve Bank of St. Louis : Online) -- 2007-008A.
Publisher: Federal Reserve Bank of St. Louis
Published: 2007
Place of publication: [St. Louis, Mo.]
Language: eng
Format: Electronic resource
Description: "We study how the use of judgment or "add-factors" in macroeconomic forecasting may disturb the set of equilibrium outcomes when agents learn using recursive methods.  We examine the possibility of a new phenomenon, which we call exuberance equilibria, in the New Keynesian monetary policy framework.  Inclusion of judgment in forecasts can lead to self-fulfilling fluctuations in a subset of the determinacy region.  We study how policymakers can minimize the risk of exuberance equilibria"--Federal Reserve Bank of St. Louis web site.
Notes: Title from PDF file as viewed on 4/19/2007.

Includes bibliographical references.

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