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Slow Learning

Author

Listed:
  • Lawrence Christiano
  • Martin S. Eichenbaum
  • Benjamin K. Johannsen

Abstract

This paper investigates what features of an economy determine whether convergence under learning is fast or slow. In all of the models that we consider, people’s beliefs about model outcomes are central determinants of those outcomes. We argue that under certain circumstances, convergence of a learning equilibrium to the rational expectations equilibrium can be so slow that policy analysis based on rational expectations is very misleading. We also develop new analytic results regarding rates of convergence in learning models.

Suggested Citation

  • Lawrence Christiano & Martin S. Eichenbaum & Benjamin K. Johannsen, 2024. "Slow Learning," NBER Working Papers 32358, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:32358
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    More about this item

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E39 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Other
    • E70 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - General

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