infinite-horizon learning, and subjective expectations with Euler-equation learning. Under rational expectations, the model … necessitates of large, possibly unrealistically so, degrees of myopia. The same result persists under infinite-horizon learning …, given that agents are still remarkably far-sighted. But, under Euler-equation learning, the model can fit the data with only …

inflation target lead to an immediate jump in the inflation level while the output gap is unaffected. We set up a theoretical … model where agents learn the behaviour of the economy. In this context, a permanent change in the inflation target leads … inflation to respond sluggishly while the output gap is temporarily affected. We extend the model to allow for both learners and …