-war economic volatility within the context of a New Keynesian model. Agents form expectations using constant gain learning then …

are assumed to be formed from a near-rational learning model. Agents are endowed with a perceived law of motion that … updating their beliefs through constant-gain learning. In each period, however, they may form expectations that fall above or … below those implied by the learning model. These deviations capture excesses of optimism and pessimism, which can be quite …

The paper evaluates the performance of three popular monetary policy rules when the central bank is learning about the … level targeting performs best under learning and maintains the advantages of conducting policy under commitment. These …