Anticipated Fiscal Policy and Adaptive Learning

George Evans, Seppo Honkapohja and Kaushik Mitra

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: We consider the impact of anticipated policy changes when agents form expectations using adaptive learning rather than rational expectations. To model this we assume that agents combine limited structural knowledge with a standard adaptive learning rule. We analyze these issues using two well-known set-ups, an endowment economy and the Ramsey model. In our set-up there are important deviations from both rational expectations and purely adaptive learning. Our approach could be applied to many macroeconomic frameworks.

Keywords: Taxation; expectations; Ramsey model (search for similar items in EconPapers)
JEL-codes: D84 E21 E43 E62 (search for similar items in EconPapers)
Pages: 29
Date: 2007-02
New Economics Papers: this item is included in nep-cba, nep-knm, nep-mac and nep-pbe
Note: Ec
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Citations: View citations in EconPapers (11)

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Related works:
Journal Article: Anticipated fiscal policy and adaptive learning (2009)
Working Paper: Anticipated Fiscal Policy and Adaptive Learning (2008)
Working Paper: Anticipated Fiscal Policy and Adaptive Learning (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0705

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