intertemporal trade-off, not present under rational expectations: it is optimal to forego stabilizing the economy in the present in … actually has rational expectations is much smaller than if the central bank mistakenly assumes rational expectations when in …

Agents forming adaptive expectations generally make systematic mistakes. This characterization has fostered the … rejection of adaptive expectations in macroeconomics. Experimental evidence, however, shows that in complex environments human … subjects frequently rely on adaptive heuristics – model-consistent expectations being simply too difficult or impossible to …

, households' narratives strongly shape their inflation expectations, which we demonstrate with descriptive survey data and a …

term gains without triggering an abrupt loss of confidence, since agents update expectations sluggishly. In the long run …

We provide survey evidence on how households’ inflation expectations matter for their spending highlighting a … implies that managing aggregate demand through households’ inflation expectations is limited and can run out of ammunition. …