. Bayesian learning implies that beliefs about the likelihood of rare disasters drop to a much more pessimistic level once a … disaster has occurred. Such a shift in beliefs can trigger massive declines in price-dividend ratios. Pessimistic beliefs … between rational and adaptive Bayesian learning. Rational learners account for the possibility of future changes in beliefs in …

beliefs and allows for an analytical characterization of uncertainty. Shocks to beliefs affect economic dynamics and … pessimism, optimism, and uncertainty that turn out to critically affect macroeconomic outcomes. Agents in the model are fully … beliefs will evolve according to what they will observe. This framework accommodates both gradual and abrupt changes in …

This paper develops a model of policy regime uncertainty and its consequences for stabilizing expectations. Because of … learning dynamics, uncertainty about monetary and fiscal policy is shown to restrict, relative to a rational expectations …

improve future performance. I analyze this tradeoff in a simple model with parameter uncertainty and conduct dynamic …

experts. Moreover, narratives about the drivers of the inflation increase are strongly correlated with beliefs about its …

banks' belief distortions and always induce the socially optimal allocation. Under uncertainty about beliefs, the central …We study how the subjective beliefs about loan repayment on the side of liquidity-constrained banks affect the central … sufficiently pessimistic beliefs realize. In extreme cases, monetary policy aims at mitigating productivity losses only, instead of …