STABILITY OF ECONOMIC DYNAMICS IN AN OPTIMAL MONETARY POLICY FRAMEWORK
In this paper we extend the analysis of optimal monetary policy rules in terms of stability of an economy, started by Evans and Honkapohja, to the case of heterogeneous private agents learning. We test these monetary policy rules in the general setup of the New Keynesian model that is a work horse of monetary policy models today. It is of interest to see that the results obtained by Evans and Honkapohja for the homogeneous learning case are replicated for the case when the representative agent hypothesis is lifted.