Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212279 
Year of Publication: 
2014
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 4/2014
Publisher: 
Bank of Finland, Helsinki
Abstract: 
We examine global dynamics under infinite-horizon learning in New Keynesian models where monetary policy practices either price level or nominal GDP targeting and compare these regimes to inflation targeting. These interest-rate rules are subject to the zero lower bound. Robustness of the three rules in learning adjustment are compared using criteria for the domain of attraction of the targeted steady state, volatility of inflation and output and sensitivity to the speed of learning parameter. Performance of price-level and nominal GDP targeting significantly improves if the additional guidance in these regimes is incorporated in private agents' learning.
Subjects: 
Adaptive Learning
Monetary Policy
Inflation Targeting
Zero Interest Rate Lower Bound
JEL: 
E63
E52
E58
Persistent Identifier of the first edition: 
ISBN: 
978-952-6699-66-0
Document Type: 
Working Paper

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