substantially. We document this fact by comparing an easy-to-grasp expectations-based policy, unconventional fiscal policy, with a … consumption via managing inflation expectations based on the Euler equation. Unconventional fiscal policy uses trivial … announcements of future consumer-price increases to boost inflation expectations and consumption expenditure on impact. Instead …

take the laissez-faire view that policy reactions to the business cycle do not help in a rational expectations world and …

post-2009 period the Central Bank was able to stabilize expectations and asset prices when it chose to do so, but this was …

. We investigate the model under different expectational assumptions: rational expectations, subjective expectations with … infinite-horizon learning, and subjective expectations with Euler-equation learning. Under rational expectations, the model … sensitive to the modeling of expectations, and they highlight learning as a key behavioral feature to understand macroeconomic …

inflation targeting with target zones or tolerance bands. Private-sector agents form subjective expectations, update their … data on realized macroeconomic variables and survey data on expectations for four inflation-targeting economies: Australia … outside the band, and they always satisfy the Taylor principle. Private-sector expectations respond similarly to structural …