This paper develops a theory of expectations-driven business cycles based on learning. Agents have incomplete knowledge … about how market prices are determined and shifts in expectations of future prices affect dynamics. In a real business cycle … consumption and leisure. Output volatility is comparable with a rational expectations analysis with a standard deviation of …

-looking Markov-switching rational expectations models and we develop an algorithm to check these conditions in practice. We use three … econometric models of Markov-switching with forward looking rational expectations models and allows an applied researcher to …

We estimate a Heterogeneous-Agent New Keynesian model with sticky household expectations that matches existing …

, for output, inflation, and survey expectations of these variables. We find that policy shifts have larger effects on … results help to explain the real effects of monetary policy, and they provide a strong rejection of the rational expectations …

learning technology to form expectations and to update continuously their beliefs regarding the dynamic structure of the … expectations, macroeconomic dynamics, and the efficient formulation of monetary policy. Economic agents rely on an adaptive … economy based on incoming data. The process of perpetual learning introduces an additional layer of dynamic interaction …

-squares learning process, determinacy of a rational expectations (RE) equilibrium is sufficient but not necessary for learnability of … information assumption, which gives the agents only lagged information on endogenous variables during the learning process, the …

-consistent expectations. This implicitly assumes unrealistic cognitive abilities on the part of economic decision makers. The relevant … similar to those of a rational expectations equilibrium, and under which they are instead quite different. The model is used … interest rate for a substantial period of time. “Neo-Fisherian” predictions are shown to depend on using rational expectations …