The Effects of Learning and Signaling on Money Demand: With an Application to Heterodox Inflation Stabilization Programs

Publicado en

  • Empirical Economics


  • This paper develops a nonlinear vector autoregression of inflation and money growth subject to changes in regime. The regimes are fully characterized by the mean and variance of inflation and are conjectured to be the result of alternative government policies. Agents are unable to observe directly whether government actions are indeed consistent with the inflation rate targeted as part of a stabilization program. However, as part of their money demand decision, agents construct probability inferences regarding the regime. Government announcements are assumed to provide agents with additional, possibly truthful information regarding the regime.

fecha de publicación

  • 2000

Enfoque geográfico

Líneas de investigación

  • Changes in Regime
  • Credibility
  • Government Announcements
  • Inflation
  • Learning
  • Money Demand
  • Non-Linear Vector Autoregressions
  • Signaling

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