On the derivation of reduced forms of rational expectations models |
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Authors: | Ignazio Visco |
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Affiliation: | Bank of Italy, 00184 Rome, Italy |
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Abstract: | This paper introduces a more intuitive and straightforward method to obtain the reduced forms of linear models containing expectations of the current endogenous variables formed rationally in various previous periods, besides the two proposed by Lucas and Aoki and Canzoneri. This method is then used, with the aid of some examples, to derive the conditions for complete (i.e., in mean and variance) policy ineffectiveness in this kind of models. |
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