policymakers' preferences, and rely on a perpetual learning technology to form expectations. We find that with learning … from those implied by rational expectations, even at long horizons. The presence of learning increases the sensitivity of … the policy maker. In contrast, under learning, private inflation expectations follow a time-varying process and provide …

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 …