Abstract:
We consider the impact of anticipated policy changes when agents
form expectations using adaptive learning rather than rational expectations.
To model this we assume that agents combine limited structural
knowledge with a standard adaptive learning rule. We analyze
these issues using two well-known set-ups, an endowment economy
and the Ramsey model. In our set-up there are important deviations
from both rational expectations and purely adaptive learning. Our
approach could be applied to many macroeconomic frameworks.