Orphanides, Athanasios; Williams, John C. - Center for Financial Studies - 2004
We develop an estimated model of the U.S. economy in which agents form expectations by continually updating their … the natural rate of unemployment during the late 1960s and 1970s on the formation of expectations and macroeconomic … expectations and destabilized the economy. Had monetary policy reacted less aggressively to perceived unemployment gaps, in …