Expectations, Learning And Monetary Policy Research

Expectation refers to decision makers for their decision-making related to the uncertain economic variables for prediction. Expectation directly from the uncertainty of the future, the objective basis is of economic information. The expectations accuracy depends on the people to grasp the economic information amount and degree of accuracy. In modern economics, the main difference between economics and science are that economic main body prospective decision. Expectations in the macroeconomic each part plays an important role:in consumption theory model, the theory of life cycle and permanent income theory which emphasizes the role of expected future income; in the investment decision, present value is calculated based on the expected sales prices and sales; at the same time the asset price (the current stock price, interest rate, exchange rate and etc.) also depends on the expected price and so on.Economic agents in decision must expect some key economic variables, based on their knowledge and experience, by learning to form their own expectation about the future. The modern monetary theory emphasized the central role of expectation in the effectiveness of monetary policy, because the expectation is self-fulfilling, that is the expectation guidance for people’s behavior. The action makes the expectation achieve the expected results. From one side, expectations affect the time path of economy, Conversely, we can reasonable hypothesis that the time of economic affects the expected path. At present, the expectation standard modeling is based on the rational expectations hypothesis (RE), that is: the public agents have the prediction variable true random process of complete knowledge, public agents use of mathematical expectation type formation is expected, in the time T,assuming that the t+1time the expected value and the actual value of consistent t+1time.Although rational expectation category fundamentally correct that classical expectation theory ignores the current information brings the deviation, In the expectation form, they think that agent can effectively use all available information, but also exist significant defects:such as everyone can get all the information; not recognizing each person cognitive limitation and different economy main body of information processing constraints, that is everyone’s expectations are not homogeneous etc.The assumption of rational expectations equilibrium is that public agent know the rule of economy, and automatically converges to rational expectation equilibrium. However, if the public agent don’t know economy rules, how they gradually have rational expectation equilibrium? Aiming at these problems, Bray (1982), Evans (1985), Lucas (1987), Marcet and Sargent (1989), come up with a solution to the problem. This scheme is that: in fact, does not require the public agent know of economy equilibrium rules, instead, they have to balance and operation rules of the perception, according to economy is itself generated economic data, using regression algorithm (for example, least squares) to update their perceived law of motion (PLM).Can economy achieve the rational expectations equilibrium, depending on the perceived to run the rule whether PLM and actual law of motion (ALM) consistent. That the public agent through "learning" to achieve the rational expectations equilibrium. Evans and Honkapohja (2001)《Learning and Expectations in Macroeconomics》 introduce a system of learning and expectations in macroeconomics especially in the formulation of monetary policy, which caused a large number of scholars to study on this subject. On the learning process of formal study and its effect on the macro economic trends and the policy suggestion, has become the most important research fields in macro economics. While there are few domestic literature in this area, this paper tries to introduce the foreign latest research achievements, and supply some monetary policy for our country.This paper base on the expectation theory of development to make a briefly review on the "learning", and introduce the recent development.Secondly, this paper uses standard new Keynes model to illustrate this problem ("learning"), and in the econometrics analysis of interest rate rules learning under the balanced solution uniqueness and stability. Then, this paper to discuss and study the new application areas, such as:inflation persistence, hyperinflation and the liquidity trap and other problems. Finally, in view of our country’s actual problem put forward the relevant policy recommendations, this paper argues that the central bank to manage the public expectation to increase transparency and credibility, strengthen communication with the public in order to influence the public learning process, in order to achieve the expectations of the public management objective.