using existing macroeconomic models by modifying expectations about policy announcements. The main advantage of our method … incorporate information about future interest rate announcements: "inattention", "credibility", "finite planning horizon", and …

This paper studies the role of expectations and monetary policy on the economy's response to climate actions. We show … mitigation tool, with a carbon tax entailing more emissions uncertainty than in a rational expectations model and a cap … inflation under control, and by the adoption of monetary rules tied to expectations rather than current macroeconomic conditions …

We study the behavior of U.S. consumers' inflation expectations during the high inflation period of 2021-22 using data … from the Survey of Consumer Expectations. Short- and, to a lesser extent, mediumterm inflation expectations rose as … inflation continued to climb, medium- and longerterm inflation expectations unexpectedly fell and medium- and longer …

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 …

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 …

At the zero lower bound (ZLB), expectations about the future path of monetary or fiscal policy are crucial. We model … expectations formation under level-k thinking, a form of bounded rationality introduced by García-Schmidt and Woodford (2019) and … from rational expectations models, such as the forward guidance and the reversal puzzle, or implausible large fiscal …

Survey of Professional Forecasters as a measure of price setters' inflation expectations. This model improves upon existing … perfect information models in explaining why, in the data, inflation expectations respond with delays to monetary impulses and …, explaining why inflation and inflation expectations were so persistently heightened. The signaling effects of monetary policy …