policy-makers' preferences, and rely on a perpetual learning technology to form expectations. We find that with learning … from those implied by rational expectations, even at long horizons. The presence of learning increases the sensitivity of … the policy-maker. In contrast, under learning, private inflation expectations follow a time-varying process and provide …

. Learning about the transmission process of monetary policy is introduced by having heterogeneous agents - i.e. the central bank …. Here following Evans and Honkapohja (2001), the learning scheme we investigate is that of least-squares learning (recursive … OLS) using the Kalman filter. We find that optimal monetary policy under learning is a policy that separates estimation …

policy-makers, learning from the experience of the 1970s, eschewed activist policies in favour of policies that concentrated …

active learning possibilities has effects on the optimal interest rate rule followed by the central bank. For a wide range of …

. This learning generates a boom and a crash, which we call `informational overshooting'. The paper applies this idea to real …