We study how the use of judgement or quot;add-factorsquot; in macroeconomic forecasting may disturb the set of equilibrium outcomes when agents learn using recursive methods. We isolate conditions under which new phenomena, which we call exuberance equilibria, can exist in standard macroeconomic...

We study how determinacy and learnability of global rational expectations equilibrium may be affected by monetary policy in a simple, two country, new Keynesian framework. The two blocks may be viewed as the U.S. and Europe, or as regions within the euro zone. We seek to understand how monetary...

The U.S. economy appears to have experienced a pronounced shift toward higher productivity over the last five years or so. We wish to understand the implications of such shifts for the structure of optimal monetary policy rules in simple dynamic economies. Accordingly, we begin with a standard...

In his column, St. Louis Fed President Jim Bullard downplays systemic risk to the financial system, given that failures of financial institutions would no longer be a surprise. (By now, the possibility of any failure is already being priced into the market.) As the shakeout of the industry...