: rational expectations and learning. We show that in this environment the ability to stabilize the real side of the economy is … private learning and misperceptions of natural rates call for greater policy inertia, a more aggressive response to inflation … economy. We show that such policies are quite robust to potential misspecification of private sector learning and the …

policymakers, learning from the experience of the 1970s, eschewed activist policies in favor of policies that concentrated on the …

the help of econometric models. Agents use least squares learning to estimate two competing models of which one is … consistent with rational expectations once learning is complete. When past performance governs the choice of forecast model …