What is the impact of surprise and anticipated policy changes when agents form expectations using adaptive learning … rather than rational expectations? We examine this issue using the standard stochastic real business cycle model with lump …-shaped response, and tend to be prominently characterized by oscillations not present under rational expectations. These fluctuations …

Most DSGE models assume full information and model-consistent expectations. This paper relaxes both these assumptions … direct knowledge of the structure of economy or the values of aggregate quanti?ties; instead they form expectations by … similar to the equilibrium with model-consistent expectations and market-consistent information. Learning does not introduce …

form expectations using adaptive learning rather than rational expectations (RE). The output multipliers for government …

This paper considers the Ricardian Equivalence proposition when expectations are not rational and are instead formed … Ricardian Equivalence to obtain, agents¡¯ expectations must not depend on government¡¯s financial variables under deficit …

We consider the impact of anticipated policy changes when agents form expectations using adaptive learning rather than … rational expectations. To model this we assume that agents combine limited structural knowledge with a standard adaptive …-up there are important deviations from both rational expectations and purely adaptive learning. Our approach could be applied …

This paper investigates the ability of the adaptive learning approach to replicate the expectations of professional … expectations of professional forecasters for a range of variables. These results suggest that, instead of relying only on the the … most recent observation, agents use more complex models to form their expectations even for financial variables where …

Within the standard RBC model, we examine issues of expectational coordination on the unique rational expectations … short-run and long-run expectations. We show this sensitivity is much too great to trigger eductive coordination in a world …

surprise in price expectations is interpreted partially by the agents as a permanent change in the parameters governing the …

-horizon expectations using adaptive learning. We ex- tend the existing framework by introducing distortionary taxes as well as elastic …