I study expectation driven liquidity traps in a model were agents have finite planning horizons and heterogeneous expectations. There are backward-looking agents, who base their expectations on past observations, and forward-looking agents, who observe the expectations of backward-looking...

In the last few years, several articles have been devoted to the study of model uncertainty in the New Keynesian model using robust control methods. Most studies have focused on how to design a robust monetary policy to take model uncertainty more seriously. Little attention has, however, been...