. Bayesian learning implies that beliefs about the likelihood of rare disasters drop to a much more pessimistic level once a … disaster has occurred. Such a shift in beliefs can trigger massive declines in price-dividend ratios. Pessimistic beliefs … between rational and adaptive Bayesian learning. Rational learners account for the possibility of future changes in beliefs in …

beliefs and allows for an analytical characterization of uncertainty. Shocks to beliefs affect economic dynamics and … pessimism, optimism, and uncertainty that turn out to critically affect macroeconomic outcomes. Agents in the model are fully … beliefs will evolve according to what they will observe. This framework accommodates both gradual and abrupt changes in …

stabilization will be temporarily abandoned. However, this announcement reduces policy uncertainty and anchors inflationary beliefs … learning about the nature of these deviations. Under constrained discretion, only short deviations occur, agents' uncertainty … about the macroeconomy remains contained, and welfare is high. However, if a deviation persists, uncertainty accelerates and …

This paper develops a model of policy regime uncertainty and its consequences for stabilizing expectations. Because of … learning dynamics, uncertainty about monetary and fiscal policy is shown to restrict, relative to a rational expectations …

improve future performance. I analyze this tradeoff in a simple model with parameter uncertainty and conduct dynamic …

banks' belief distortions and always induce the socially optimal allocation. Under uncertainty about beliefs, the central …We study how the subjective beliefs about loan repayment on the side of liquidity-constrained banks affect the central … sufficiently pessimistic beliefs realize. In extreme cases, monetary policy aims at mitigating productivity losses only, instead of …

interest rate rules when agents have heterogeneous expectations and update their beliefs based on past performance as in Brock …

econometric model to make inferences about future uncertainty. Agents do not know other agents' tastes or beliefs and therefore do …