. Bayesian learning implies that beliefs about the likelihood of rare disasters drop to a much more pessimistic level once a … persist for some time. Thus, belief dynamics are a source of apparent excess volatility relative to a rational expectations … between rational and adaptive Bayesian learning. Rational learners account for the possibility of future changes in beliefs in …

with internal rationality. We also show that equilibrium prices depend on expectations of the discounted price and dividend …We present a decision theoretic framework with agents that are learning about the behavior of market determined … about equilibrium prices, so that learning about price behavior, as in Adam, Marcet and Nicolini (2008), is fully consistent …

A central tenet of inflation targeting is that establishing and maintaining well-anchored inflation expectations are … public forms expectations and policymakers must formulate and implement monetary policy. Using an estimated model of the U ….S. economy, we show that monetary policy rules that would perform well under the assumption of rational expectations can perform …

deviations from active monetary policy, inflation expectations remain anchored and the model captures the monetary approach … would improve welfare by anchoring agents' expectations. …

interactions. Despite the fact that the rational expectations equilibrium (REE) is characterized by a simple pricing rule that …