characterization of uncertainty. Shocks to beliefs are shown to have both .rst-order and second-order effects. To illustrate how to …This paper develops methods to study the evolution of agents’ expectations and uncertainty in general equilibrium … models. A central insight consists of recognizing that the evolution of agents. beliefs can be captured by defining a set of …

characterization of uncertainty. Shocks to beliefs are shown to have both first-order and second-order effects. To illustrate how to …This paper develops methods to study the evolution of agents’ expectations and uncertainty in general equilibrium … models. A central insight consists of recognizing that the evolution of agents' beliefs can be captured by defining a set of …

. 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 …

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 …

become pessimistic about future monetary policy, the disanchoring of inflation expectations occurs, and uncertainty rises …

become pessimistic about future monetary policy, the disanchoring of inflation expectations occurs, and uncertainty rises …