We study the impact of adaptive learning for the design of a robust monetary policy using a small open-economy New … Keynesian model. We find that slightly departing from rational expectations substantially changes the way the central bank deals … with model misspecification. Learning induces an intertemporal trade-off for the central bank, i.e., stabilizing inflation …

roles. First, it provides a boundedly rational model of how rational expectations can be achieved. Secondly, learning acts … as a selection device in models with multiple REE (rational expectations equilibria). Third, the learning dynamics …This chapter provides a survey of the recent work on learning in the context of macroeconomics. Learning has several …

macroeconomic variables and their corresponding expectations. In the empirical analysis, we exploit direct data on expectations from … surveys. To explain the joint evolution of realized variables and expectations, we adopt a DSGE-VAR approach, which allows us … failure of New Keynesian models under the rational expectations hypothesis to account for the dynamic interactions between …