Incorporating adaptive learning into macroeconomics requires assumptions about how agents incorporate their forecasts … into their decision-making. We develop a theory of bounded rationality that we call finite-horizon learning. This approach … generalizes the two existing benchmarks in the literature: Eulerequation learning, which assumes that consumption decisions are …

models of expectations formation that rely on econometric learning. Some apparently natural policy rules turn out to imply … expectational instability of private agents’ learning. We use the standard New Keynesian model to illustrate this problem and survey … learning. We then consider some practical concerns such as measurement errors in private expectations, observability of …