Adaptive Control in the Presence of Time-Varying Parameters

In a recent paper Amman and Kendrick (1993) and that, under the rational expectations hypothesis, the standard result of ineffectiveness of monetary policy might not hold when some of the parameters of the system are uncertain. This seems to encourage the joint use of control theory and rational expectations. Given the complexity of the solution procedures suggested (e.g., Hansen and Sargent, 1980; Fair and Taylor, 1983) it may be worth it, in some occasions, to use an 'approximation' based on time-varying parameters. These pages discuss the effect of uncertain hyperstructural parameters on the choice of the control in an adaptive control framework.