; and the adoption of a price-level target. We consider two assumptions about expectations formation. One assumption is … fully model-consistent expectations (MCE) - a reasonable assumption when a policy has been in place for some time, but …, and that other agents form their expectations using a small-scale VAR model estimated using historical data. All of the …

forecasts of inflation rate, output gap and exchange rate changes in terms of magnitude and statistical significance across the … main objective of the policy makers is to fight the inflation rate and to limit the depreciation of exchange rate rather …

inflation) do not breach particular ‘thresholds'. In common with other similar policies, threshold-based forward guidance (TBFG …

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 …