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 …

form expectations using adaptive learning rather than rational expectations (RE). The output multipliers for government …

expectations. We impose inflation and consumption lower bounds, which can be relevant when agents are pessimistic. The inflation … target is locally stable under learning. Pessimistic initial expectations may sink the economy into steady-state stagnation …. Following a severe pessimistic expectations shock a large temporary fiscal stimulus is needed to avoid or emerge from stagnation …

not hold in general. Our results suggest that taxation has a significant and strong impact on consumption choice. Over the … Ricardian proposition. Our results show dynamic effects; taxation inuences consumption beyond the current period. …

not hold in general. Our results suggest that taxation has a significant and strong impact on consumption choice. Over the … Ricardian proposition. Our results show dynamic effects; taxation inuences consumption beyond the current period. …

not hold in general. Our results suggest that taxation has a significant and strong impact on consumption choice. Over the … Ricardian proposition. Our results show dynamic effects; taxation influences consumption beyond the current period. …

unconventional policies that aim to increase households' spending directly through managing their expectations. We first show … theoretically and empirically that higher in ation expectations increase households' consumption. We then design a difference … demand via managing expectations. Whereas unconventional fiscal policy increases households' expectations and spending …