past policy has no effect on expectations of future policy. However, when people's policy forecasts are based on the … policymaker's present and past actions, for example through learning and estimation of variables or parameters, policy affects … expectations of future policy, and the time-consistent solution improves. Therefore, a successful policymaker needs to know how …

New Keynesian theory identifies a set of principles central to the design and implementation of monetary policy. These … principles rely on the ability of a central bank to manage expectations precisely, with policy prescriptions typically derived … whether central banks can influence expectations with as much control as previously thought. In this paper, we survey the …