We study how the use of judgement or quot;add-factorsquot; in macroeconomic forecasting may disturb the set of equilibrium outcomes when agents learn using recursive methods. We isolate conditions under which new phenomena, which we call exuberance equilibria, can exist in standard macroeconomic...

We study how determinacy and learnability of global rational expectations equilibrium may be affected by monetary policy in a simple, two country, new Keynesian framework. The two blocks may be viewed as the U.S. and Europe, or as regions within the euro zone. We seek to understand how monetary...

In the recent literature on monetary and fiscal policy design, adoption of policies that induce both determinacy and learnability of equilibrium has been considered fundamental to economic stabilization. We study the connections between determinacy of rational expectations equilibrium, and...

We study the hypothesis that misperceptions of trend productivity growth during the onset of the productivity slowdown in the U.S. caused much of the great inflation of the 1970s. We use the general equilibrium, sticky price framework of Woodford (2003), augmented with learning using the...

We study the hypothesis that misperceptions of trend productivity growth during the onset of the productivity slowdown in the U.S. caused much of the great inflation of the 1970s. We use the general equilibrium, sticky price framework of Woodford (2003), augmented with learning using the...

We study the connections between determinacy of rational expectations equilibrium, and expectational stability or learnability of that equilibrium, in a relatively general New Keynesian model. Adoption of policies that induce both determinacy and learnability of equilibrium has been considered...

Since the introduction of rational expectations, there have been issues with multiple equilibria and equilibrium selection. We study the connections between determinacy of rational expectations equilibrium and learnability of that equilibrium in a general class of purely forward‐looking...

The U.S. economy appears to have experienced a pronounced shift toward higher productivity over the last five years or so. We wish to understand the implications of such shifts for the structure of optimal monetary policy rules in simple dynamic economies. Accordingly, we begin with a standard...