Escaping nash inflation

In Koo Cho, Noah Williams, Thomas Sargent

    Research output: Contribution to journalArticle

    Abstract

    An ordinary differential equation (ODE) gives the mean dynamics that govern the convergence to self-confirming equilibria of self-referential systems under discounted least squares learning. Another ODE governs escape dynamics that recurrently propel away from a self-confirming equilibrium. In a model with a unique self-confirming equilibrium, the escape dynamics make the government discover too strong a version of the natural rate hypothesis. The escape route dynamics cause recurrent outcomes close to the Ramsey (commitment) inflation rate in a model with an adaptive government.

    Original languageEnglish (US)
    Pages (from-to)1-40
    Number of pages40
    JournalReview of Economic Studies
    Volume69
    Issue number1
    DOIs
    StatePublished - 2002

    Fingerprint

    Inflation
    Self-confirming equilibrium
    Government
    Differential equations
    Inflation rate
    Least squares learning
    Natural rate hypothesis

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Cho, I. K., Williams, N., & Sargent, T. (2002). Escaping nash inflation. Review of Economic Studies, 69(1), 1-40. https://doi.org/10.1111/1467-937X.00196

    Escaping nash inflation. / Cho, In Koo; Williams, Noah; Sargent, Thomas.

    In: Review of Economic Studies, Vol. 69, No. 1, 2002, p. 1-40.

    Research output: Contribution to journalArticle

    Cho, IK, Williams, N & Sargent, T 2002, 'Escaping nash inflation', Review of Economic Studies, vol. 69, no. 1, pp. 1-40. https://doi.org/10.1111/1467-937X.00196
    Cho, In Koo ; Williams, Noah ; Sargent, Thomas. / Escaping nash inflation. In: Review of Economic Studies. 2002 ; Vol. 69, No. 1. pp. 1-40.
    @article{fe2e40efc30d4aafb050d56006d4fdd3,
    title = "Escaping nash inflation",
    abstract = "An ordinary differential equation (ODE) gives the mean dynamics that govern the convergence to self-confirming equilibria of self-referential systems under discounted least squares learning. Another ODE governs escape dynamics that recurrently propel away from a self-confirming equilibrium. In a model with a unique self-confirming equilibrium, the escape dynamics make the government discover too strong a version of the natural rate hypothesis. The escape route dynamics cause recurrent outcomes close to the Ramsey (commitment) inflation rate in a model with an adaptive government.",
    author = "Cho, {In Koo} and Noah Williams and Thomas Sargent",
    year = "2002",
    doi = "10.1111/1467-937X.00196",
    language = "English (US)",
    volume = "69",
    pages = "1--40",
    journal = "Review of Economic Studies",
    issn = "0034-6527",
    publisher = "Oxford University Press",
    number = "1",

    }

    TY - JOUR

    T1 - Escaping nash inflation

    AU - Cho, In Koo

    AU - Williams, Noah

    AU - Sargent, Thomas

    PY - 2002

    Y1 - 2002

    N2 - An ordinary differential equation (ODE) gives the mean dynamics that govern the convergence to self-confirming equilibria of self-referential systems under discounted least squares learning. Another ODE governs escape dynamics that recurrently propel away from a self-confirming equilibrium. In a model with a unique self-confirming equilibrium, the escape dynamics make the government discover too strong a version of the natural rate hypothesis. The escape route dynamics cause recurrent outcomes close to the Ramsey (commitment) inflation rate in a model with an adaptive government.

    AB - An ordinary differential equation (ODE) gives the mean dynamics that govern the convergence to self-confirming equilibria of self-referential systems under discounted least squares learning. Another ODE governs escape dynamics that recurrently propel away from a self-confirming equilibrium. In a model with a unique self-confirming equilibrium, the escape dynamics make the government discover too strong a version of the natural rate hypothesis. The escape route dynamics cause recurrent outcomes close to the Ramsey (commitment) inflation rate in a model with an adaptive government.

    UR - http://www.scopus.com/inward/record.url?scp=0036179752&partnerID=8YFLogxK

    UR - http://www.scopus.com/inward/citedby.url?scp=0036179752&partnerID=8YFLogxK

    U2 - 10.1111/1467-937X.00196

    DO - 10.1111/1467-937X.00196

    M3 - Article

    VL - 69

    SP - 1

    EP - 40

    JO - Review of Economic Studies

    JF - Review of Economic Studies

    SN - 0034-6527

    IS - 1

    ER -