This paper develops methods to study the evolution of agents' expectations and uncertainty in general equilibrium models. A central insight consists of recognizing that the evolution of agents' beliefs can be captured by defining a set of regimes that are characterized by the degree of agents'...

We develop a model in which policy makers' reputation for Fiscal Virtue evolves over time. Fiscal Virtue is generally desirable because it leads to a stable macroeconomic environment, but when entering the zero lower bound, policy makers face a trade-off between preserving their reputation and...