Learning with bounded memory in stochastic frameworks is incomplete in the sense that the learning dynamics cannot converge to an rational expectations equilibrium (REE). The properties of the dynamics arising from such rules are studied for models with steady states. If in standard linear...

Recent models of monetary policy can have indeterminacy of equilibria. The indeterminacy property is often viewed as a difficulty of these models. We consider its significance using the learning approach to expectations formation by employing expectational stability as a robustness criterion for...