helps overall macroeconomic stability by making expectations operate like automatic stabilizers. Second, under a price level … arguments in favour of or against price level path stability depend on the degree of dependence of private sector expectations …

expectations for the conduct of monetary policy. We first review the literature that studies the implications of adaptive learning … structure of the economy, including the precise mechanism generating private sector's expectations. The focus on optimal policy … allows us to investigate how and to what extent a change in the assumption of how agents form their inflation expectations …

idiosyncratic income risk and use adaptive learning in order to form their expectations. Households experience different histories … implies the existence of heterogeneous expectations. In HANK models, supply shocks generate precautionary saving. The learning … better anchoring expectations. …

agents have perfectly rational expectations, is unstable if in fact these agents follow standard adaptive learning rules …. This problem can be overcome if private expectations are observed and suitably incorporated into the policy maker's optimal … observed household and firm expectations …

agents have perfectly rational expectations, is unstable if in fact these agents follow standard adaptive learning rules …. This problem can be overcome if private expectations are observed and suitable incorporated into the policy maker's optimal … observed household and firm expectations …

agents have perfectly rational expectations, is unstable if in fact these agents follow standard adaptive learning rules …. This problem can be overcome if private expectations are observed and suitably incorporated into the policy maker's optimal … observed household and firm expectations …

Keynesian model. We find that slightly departing from rational expectations substantially changes the way the central bank deals … (output gap) today or stabilizing it tomorrow. The central bank should optimally anchoring private agents expectations in the … short term in exchange of easier future intratemporal trade-offs. Compared to the rational expectations equilibrium, the …

roles. First, it provides a boundedly rational model of how rational expectations can be achieved. Secondly, learning acts … as a selection device in models with multiple REE (rational expectations equilibria). Third, the learning dynamics …