requirement that the underlying rational expectations equilibrium is locally indeterminate. We suggest ways in which policymakers …

We develop an estimated model of the U.S. economy in which agents form expectations by continually updating their … the natural rate of unemployment during the late 1960s and 1970s on the formation of expectations and macroeconomic … expectations and destabilized the economy. Had monetary policy reacted less aggressively to perceived unemployment gaps, in …

: rational expectations and learning. We show that in this environment the ability to stabilize the real side of the economy is … and unemployment and how private agents form expectations. In particular, we consider two models of expectations formation … significantly reduced relative to an economy under rational expectations with perfect knowledge. Furthermore, policies that would be …

active learning possibilities has effects on the optimal interest rate rule followed by the central bank.For a wide range of …

interest rate rule, raising the possibility of inefficient fluctuations due to the dependence of expectations on extraneous … under private agent learning can in some cases be stable when the observed sunspot has a suitable time series structure. In … combine forward looking expectations and predetermined variables. We consider a variety of specifications that incorporate …

In recent years, the learnability of rational expectations equilibria (REE) and determinacy of economic structures have … certain features of monetary policy rules that facilitate learning. However a treatment of policy design for learnability in … worlds where agents have potentially misspecified their learning models has yet to surface. This paper provides such a …

We study how determinacy and learnability of global rational expectations equilibrium may be affected by monetary … creation of a unique rational expectations equilibrium worldwide which can be learned by market participants. We study cases in …

We analyze determinacy and stability under learning (E-stability) of rational expectations equilibria in the Blanchard …-stability shrinks. These rules perform worse according to these two dimensions when hiring costs go up. Finally, under expectations …

We derive the optimal monetary policy in a sticky price model when private agents follow adaptive learning. We show … intertemporal trade-off, not present under rational expectations: it is optimal to forego stabilizing the economy in the present in … order to facilitate private sector learning and thus ease the future intratemporal inflation-output gap trade-offs. The …

, and makes active use of, the learning algorithm agents follow in forming their expectations. In this setup, monetary … policy can influence future expectations through its e ect on learning dynamics, introducing an additional tradeo between … Central Bank mistakenly assumes rational expectations whereas in fact agents are learning. …