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 …

interest rate rule, raising the possibility of inefficient fluctuations due to the dependence of expectations on extraneous … combine forward looking expectations and predetermined variables. We consider a variety of specifications that incorporate …

This paper analyzes how the formation of expectations constrains monetary and fiscal policy design. Economic agents … the policy regime using historical data. Regime uncertainty substantially narrows, relative to a rational expectations … analysis of the model, the menu of policies consistent with expectations stabilization. When agents are learning about the …

Expectations play a central role in modern macroeconomics. The econometric learning approach, in line with the … cognitive consistency principle, models agents as forming expectations by estimating and updating subjective forecasting models … in real time. This approach provides a stability test for RE equilibria and a selection criterion in models with multiple …

This paper analyzes how the formation of expectations constrains monetary and fiscal policy design. Economic agents … the policy regime using historical data. Regime uncertainty substantially narrows, relative to a rational expectations … analysis of the model, the menu of policies consistent with expectations stabilization. When agents are learning about the …

The recent macroeconomic literature stresses the importance of managing heterogeneous expectations in the formulation … interest rate rules when agents have heterogeneous expectations and update their beliefs based on past performance as in Brock … converge to the rational expectations equilibrium as multiple equilibria may persist, even when a fully rational, but costly …

monetary policy to anchor inflation expectations. The model predicts that the Great Moderation period would not have been so …

expectations. Instead, we examine the dynamic consequences of implementation strategies, when the actual economy features … expectational heterogeneity. Agents have either rational or adaptive expectations. Consequently the central bank's ability to … achieve price-stability under heterogeneous expectations depends on its objective and implementation strategy. An expectations …

Rational expectations has been the dominant way to model expectations, but the literature has quickly moved to a more … their expectations. A standard assumption is that agents form expectations by using the correctly specified reduced form … included. Therefore, agents base expectations on a misspecified MSV solution. In contrast, we assume agents know the deep …