Deviations of market participants forecasts from full-information rational expectations (FIRE) are usually specified to arise from limited information or irrationality. Relying on a novel theoretical characterization, we present empirical evidence that these specifications are inconsistent with...

A feature of recent monetary policy asset purchase programmes is the reinvestment policy: the central bank announces to keep the overall volume of assets on its balance sheet constant for some time. In this paper, we systematically assess the macroeconomic effects of such reinvestment policies....