inferences under rational expectations, whereas the fraction of backward looking price setters increases. …

Experience-Based Learning (EBL) that renders expectations heterogeneous across age groups. Under EBL, the age …-distribution directly affects the composition of aggregate expectations which gives rise to a novel channel by which the demographic …-independent expectations, we show that EBL weakens the pass-through of monetary policy on aggregate demand. This affects monetary policy …

substantially. We document this fact by comparing an easy-to-grasp expectations-based policy, unconventional fiscal policy, with a … consumption via managing inflation expectations based on the Euler equation. Unconventional fiscal policy uses trivial … announcements of future consumer-price increases to boost inflation expectations and consumption expenditure on impact. Instead …

We study zero interest-rate policy in response to a large negative demand shock when long-run expectations can fall … over time. Because falling expectations make monetary policy less effective by raising real interest rates, the optimal … forward guidance policy makes large front-loaded promises to stabilize expectations. Policy is too stimulatory in the event of …

This paper analyzes monetary policy in a model with a potential unanchoring of inflation expectations. The degree of … unanchoring is given by how sensitively the public's long-run inflation expectations respond to inflation surprises. I find that … optimal policy moves the interest rate aggressively when expectations unanchor, allowing the central bank to accommodate …

Price-level targeting (PLT) is optimal under the fully-informed rational expectations (FIRE) benchmark but lacks … experiment - where expectations are elicited from human subjects - to collect data on expectations, inflation and output dynamics … emulate the subjects' expectations with a micro-founded heterogeneous-expectation New Keynesian (HENK) model and reproduce the …

We propose a novel framework to gauge the credibility of central banks' commitment to an inflation-targeting regime …

analytically compare expectations-driven stagnation to a secular stagnation episode and find contrasting policy implications for …

We use a representative online survey to investigate the inflation expectations of German consumers and the credibility … of the ECB's inflation target during the recent high inflation period. We find that credibility has trended downwards … since summer 2021, reaching an all-time low in April 2022. The high correlation between inflation expectations and the …

Keynesian model with heterogeneous expectations. We explicitly focus on the "anchoring" of expectations that is modeled as the … prevent waves of pessimism and exclude near unit root dynamics, even when expectations are unanchored. However, as shocks … of expectations evolves endogenously, the anchoring of expectations at the time the bad shocks hit is crucial in …