Macroeconomic and monetary policies from the “eductive” viewpoint

Pre-print, Working paper: The "eductive" viewpoint provides a theoretically sophisticated analysis as well as an intuitively plausible shortcut to the study of expectational coordination in economic models. From the review of expectational criteria in a class of dynamical models of macroeconomic theory, the paper shows how such an "eductive" viewpoint completes and deepens rather than contradicts standard analysis. It however argues that the "eductive" approach, when correctly implemented, challenges the conditions of learning in infinite-horizon models with infinitely-lived agents. In particular, in a simple monetary model adopting such a framework, Taylor rules may be stabilizing, in the demanding sense under scrutiny, but only within a small window for the reaction coefficient.

Author(s)

Roger Guesnerie

Date of publication
  • 2008
Keywords JEL
D83 D84 E3 E52 E58
Keywords
  • Expectational coordination
  • Dynamical models
  • Infinitely lived agents
  • Cashless economy
  • Inflation
  • Adaptive and eductive learning
  • Taylor rules
  • Central banks
Internal reference
  • PSE Working Papers n°2008-24
Version
  • 1