Slobodyan, Sergey; Wouters, Raf - In: American Economic Journal: Macroeconomics 4 (2012) 2, pp. 65-101
This paper evaluates the empirical performance of a medium-scale DSGE model with agents forming expectations using small forecasting models updated by the Kalman filter. The adaptive learning model fits the data better than the rational expectations (RE) model. Beliefs about the inflation...