Evans, George W.; Honkapohja, Seppo; Mitra, Kaushik - C.E.P.R. Discussion Papers - 2012
What is the impact of surprise and anticipated policy changes when agents form expectations using adaptive learning … rather than rational expectations? We examine this issue using the standard stochastic real business cycle model with lump …-shaped response, and tend to be prominently characterized by oscillations not present under rational expectations. These fluctuations …