Orphanides, Athanasios; Williams, John C. - Federal Reserve Board (Board of Governors of the … - 2007
: rational expectations and learning. We show that in this environment the ability to stabilize the real side of the economy is … significantly reduced relative to an economy under rational expectations with perfect knowledge. Furthermore, policies that would be … expectations. In particular, we consider two models of expectations formation:
rational expectations and learning. We show that in …