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1. University of Oregon – Economics 607. Winter 2014
Advanced Topics in Macroeconomics. TuTh noon – 1:50pm in 410PLC
Professor George W. Evans
This course analyzes expectations and learning in modern dynamic stochastic macroeconomic
models. We develop techniques for solving for the rational expectations equilibrium (REE) and examine
whether agents following adaptive or statistical learning schemes will converge over time to RE. When
there are multiple REE, we will be interested in determining which of them can be possible points of
convergence under learning. We will also consider cases in which learning can lead to non-REE learning
dynamics. A substantial part of the course will be devoted to studying the implications of learning for
macroeconomic policy and to looking at a range of applications.
The first six weeks of the course will focus on learning theory, in some standard set-ups, and will
mainly be based on my book with Seppo Honkapohja, Learning and Expectations in Macroeconomics,
(LEM). The second part of the course will emphasize applications of learning and will mainly be based on
recent journal articles. We will cover a selection of the papers listed, depending on the time available, and
depending in part on the preferences of students.
THEORY
1. Introduction to expectations and adaptive learning. Convergence to rational expectations of least
squares learning in the cobweb – Lucas model. Stochastic recursive algorithms. Expectational stability.
LEM, Ch. 1 and Ch. 2.
“Learning and Macroeconomics,” G.W. Evans and S. Honkapohja, Annual Review of
Economics, Vol. 1, 2009, 421 – 449.
“Learning as a Rational Foundation for Macroeconomics and Finance,” G.W. Evans and S.
Honkapohja,, Ch. 2 in Rethinking Expectations: The Way Forward for Macroeconomics, Roman
Frydman and Edmund S. Phelps (eds.), Princeton University Press, 2013.
2. Variations: Learning steady states. Misspecified models and restricted perceptions equilibria. Learning
in some standard models: OG, IS-LM-PC and Increasing Social Returns models.
LEM, Ch. 3, sections 3, 4 and 6, LEM, Ch. 4, sections 1, 2, 3, and 6.
3. Further topics in learning: Learning in univariate dynamic linear expectations models. Minimal State
Variable solutions and the full set of solutions. Models with lags. Weak and strong E-stability. Learning
in nonlinear univariate models. 2-state SSEs.
LEM, Ch. 8. LEM, Ch. 11, 12.
4. Solutions to linearized multivariate RE models. Basic RBC model and extensions. Learning in
multivariate models.
Lecture Notes “Multivariate Stochastic Linear Difference Equations and Solutions to RE Models”
R.E.A. Farmer, The Macroeconomics of Self-Fulfilling Prophecies, 2nd
ed., Ch. 1-3, 5.4,7.
Software: Matlab. Dynare. Gensys.
LEM, Ch. 10.
5. Persistent learning dynamics. Hysteresis and endogenous fluctuations in the ISR model. Sargent’s
inflation model.
LEM, Ch. 13.2, Ch. 14.1, 14.3-14.4
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2. EXTENSIONS AND APPLICATIONS
Monetary policy in the “New Keynesian” model
(i) The New Keynesian Model:
Carl Walsh, Monetary Theory and Policy, 3rd Edition, Chapter 8.
Jordi Galì, Monetary Policy, Inflation and the Business Cycle: an introduction to the New
Keynesian Framework. Princeton University Press, 2008. Chapters 1 – 3.
(ii) Overviews of Learning and Monetary Policy in the New Keynesian Model:
G. W. Evans and S. Honkapohja, “Adaptive Learning and Monetary Policy Design,” Journal of
Money, Credit and Banking, Vol. 35, 1045 - 1072.
Bullard, J. (2006): “The Learnability Criterion and Monetary Policy,” Federal Reserve Bank of
St. Louis Review, 88, 203 - 217.
G. W. Evans and S. Honkapohja, “Expectations, Learning and Monetary Policy: an overview of
recent research,” in Monetary Policy under Uncertainty and Learning, ed. by Klaus Schmidt-Hebbel and
Carl Walsh, 2009, Central Bank of Chile, Santiago, pp. 22-76.
(iii) Learning and Taylor-rules
J. Bullard and K. Mitra, “Learning about monetary policy rules,” Journal of Monetary
Economics, Vol. 49, 2002, pp. 1105-1129.
J. Bullard and K. Mitra, “Determinacy, learnability and monetary policy inertia,” Journal of
Money Credit and Banking, Vol. 39, 2007, 1177—1212.
J. Duffy and W. Xiao, “Investment and Monetary Policy: Determinacy and Learnability of
Equilibrium,” Journal of Money, Credit, and Banking, Vol. 43, 2011.
I. Muto, “Monetary policy and learning from the central bank's forecast,” Journal of Economic
Dynamics and Control, Elsevier, vol. 35, 2011, 52-66.
(iv) Learning and optimal monetary policy
G. W. Evans and S. Honkapohja, “Expectations and the stability problem for optimal monetary
policies,” Review of Economic Studies, Vol. 70, 2003, pp. 807-824.
G. W. Evans and S. Honkapohja, “Monetary policy, expectations and commitment,”
Scandinavian Journal of Economics, Vol. 108, 2006, pp. 15-38.
S. Honkapohja and K. Mitra, “Performance of monetary policy with internal central bank
forecasting,” Journal of Economic Dynamics and Control, Vol.29, 2005, pp. 627-658.
G. W. Evans and Bruce McGough, “Optimal constrained interest-rate rules,” Journal of Money,
Credit and Banking, Vol. 39, 2007, 1335-1356.
Learning and the planning horizon
(i) Euler-equation learning vs. infinite-horizon learning
S. Honkapohja, K. Mitra and G. W. Evans, “Notes on Agents' Behavioral Rules under Adaptive
Learning and Studies of Monetary Policy” (with S. Honkapohja and K. Mitra), Ch. 4, pp. 63-119, in
Macroeconomics at the Service of Public Policy, ed. T. J. Sargent and J. Vilmunen, Oxford University
Press, 2013.
G.W. Evans and S. Honkapohja, “Learning as a Rational Foundation for Macroeconomics and
Finance,” Ch. 2, Section 2.4.1, in Rethinking Expectations: The Way Forward for Macroeconomics,
Roman Frydman and Edmund S. Phelps (eds.), Princeton Univ. Press, 2013.
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3. B. Preston, “Learning about monetary policy rules when long-horizon expectations matter,”
International Journal of Central Banking, Vol. 1, 2005, 81-126.
S. Eusepi and B. Preston, “Expectations, Learning and Business Cycle Fluctuations,” American
Economic Review, Vol. 101, 2011, 2844-2872.
G.W. Evans and K. Mitra, “E-stability in the Stochastic Ramsey Model,” Economics Letters, Vol.
118, 2013, 407-410.
W.A. Branch, G.W. Evans and B. McGough, “Finite Horizon Learning,” Ch. 8, pp. 141-163, in
Macroeconomics at the Service of Public Policy, ed. T. J. Sargent and J. Vilmunen, Oxford University
Press, 2013.
G.W. Evans and B. McGough, “Learning to Optimize,” mimeo., 2013.
(ii) Applications of long-horizon learning to monetary policy
B. Preston, “Adaptive learning, forecast-based instrument rules and monetary policy,” Journal of
Monetary Economics, Vol. 53, 2006, pp. 1187-1211.
S. Eusepi and B. Preston, “Central Bank Communication and Expectations Stabilization,”
American Economic Journals: Macroeconomics, Vol. 2, 2010, 235–271.
(iii) Applications of long-horizon learning to fiscal policy
G. W. Evans, S. Honkapohja and K. Mitra, “Anticipated Fiscal policy and Adaptive Learning,”
Journal of Monetary Economics, Vol. 3, 2011, 159-191.
G. W. Evans, S. Honkapohja and K. Mitra , “Does Ricardian Equivalence hold when expectations
are not rational?”, Journal of Money, Credit and Banking, Vol. 44, 2012, 1259-1283.
K. Mitra, G.W. Evans, S. Honkapohja, “Policy change and learning in the RBC model,” Journal
of Economic Dynamics & Control, Vol. 37, 2013, 1947-1971.
E. Gasteiger, and S. Zhang, 2014, “Anticipation, learning and welfare: the case of distortionary
taxation,” Journal of Economic Dynamics and Control, Vol. 39, 2014, 113-126.
Sunspots and Learning
(i) Stability of sunspot equilibria: general methodology
LEM Ch. 10.
G.W. Evans and S. Honkapohja, “Expectational stability of stationary sunspot equilibria in a
forward-looking linear model,” Journal of Economic Dynamics and Control, 28, 2003, 171-181.
G.W. Evans and S. Honkapohja,“Existence of Adaptively Stable Sunspot Equilibria near an
Indeterminate Steady State,” Journal of Economic Theory, Vol. 111, 2003, 125-134.
G. W. Evans and B. McGough, Stable sunspot solutions in models with predetermined variables,
Journal of Economic Dynamics and Control, Vol. 29, 2005, pp. 601-625.
(ii) Sunspot equilibria in “irregular” RBC models.
S. Schmidt-Grohe and M. Uribe, “Balanced-budget rules, distortionary taxes and aggregate
instability,” Journal of Political Economy, Vol. 105, 1997, pp. 976-1000.
G. W. Evans and B. McGough, “Indeterminacy and the stability puzzle in non-convex
economies,” Contributions to Macroeconomics, Vol. 5, Issue 1, 2005.
J. Duffy and W. Xiao, “Instability of sunspot equilibria in real business cycle models under
adaptive learning,” Journal of Monetary Economics, Vol. 52, 2007, pp. 879-903.
(iii) Sunspot equilibria in NK models.
S. Honkapohja and K. Mitra, “Are non-fundamental equilibria learnable in models of monetary
policy,” Journal of Monetary Economics, Vol. 51, 2004, 1743-1770.
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4. G. W. Evans and B. McGough, “Monetary policy, indeterminacy and learning,” Journal of
Economic Dynamics and Control, Vol. 29, 2005, pp. 1809-1840.
G. W. Evans and Bruce McGough, “Monetary policy and stable indeterminacy with inertia,”
Economics Letters, Vol. 87, 2005, pp. 1-7.
(iii) Sunspot equilibria in other models.
P. Howitt and P. McAfee, “Animal spirits,” American Economic Review, Vol. 82, 1992, 493-507.
G.W. Evans, S. Honkapohja and P. Romer, American Economic Review, Vol. 88, 1998, 495-515.
G.W. Evans, S. Honkapohja and R. Marimon, “Stable Sunspot Equilibria in a Cash-in-Advance
Economy” The B. E. Journal of Macroeconomics, Vol. 7: Iss. 1 (Advances), 2007, Article 3.
J. Arifovic, G.W. Evans and O. Kostyshyna, “Are Sunspots Learnable? An Experimental
Investigation in a Simple Macroeconomic Model,” mimeo., 2013.
R. Marimon and S. Sunder, “Expectations and Learning under Alternative Monetary Regimes:
An Experimental Approach,” Economic Theory, Vol. 4, 1994, 131-62.
J. Duffy and E. O’N. Fisher, “Sunspots in the Laboratory,” American Economic Review 95,
2005, 510-529.
P. Shea, “Learning by Doing, Short-sightedness and Indeterminacy,” Economic Journal, Vol.
123, 2013, 738-763.
Monetary policy with constant gain learning
A. Orphanides and J. Williams, “Imperfect knowledge, inflation expectations and monetary
policy” in The Inflation -Targeting Debate, eds. B. Bernanke and M. Woodford, U. Chicago Press, 2005.
G. W. Evans and G. Ramey, “Adaptive expectations, underparameterization and the Lucas
critique,” Journal of Monetary Economics, Vol. 53, 2006, 249-264.
I.-K. Cho, N. Williams and T. J. Sargent, “Escaping Nash equilibria”, Review of Economic
Studies, Vol. 69, 2002, pp. 1-40.
B. McGough, “Shocking escapes”, Economic Journal, Vol. 116, 2006, pp. 507-528.
A. Orphanides and J. Williams (2007), “Robust Monetary Policy with Imperfect Knowledge,”
Journal of Monetary Economics, Vol. 54, 2007, 1406-1435.
G. W. Evans and S. Honkapohja , “Robust Learning Stability with Operational Monetary Policy
Rules”, in Monetary Policy under Uncertainty and Learning, ed. by Klaus Schmidt-Hebbel and Carl
Walsh, 2009, Central Bank of Chile, Santiago, pp. 145-170.
Empirical Studies of monetary policy, expectations and learning
T. Cogley and T. Sargent, “The conquest of US inflation: learning and robustness to model
uncertainty,” Review of Economic Dynamics, Vol. 8, 2005, 1661-1707.
W. Branch and G. Evans, “A simple recursive forecasting model,” Economics Letters Vol. 91,
2006, 158-166.
A. Orphanides and J. Williams, “The decline of activist stabilization policy: natural rate
perceptions, learning and expectations,” Journal of Economic Dynamics and Control, Vol. 29, 2005, pp.
1927-1950.
J. Bullard and Eusepi, “Did the great inflation occur despite policymaker commitment to a Taylor
rule?,” Review of Economic Dynamics, Vol. 8, 2005, pp. 324-359.
K. Adam, “Experimental evidence on the persistence of output and inflation,” Economic Journal,
Vol. 117, 2007, 603-636.
W. Branch, “The theory of rationally heterogeneous expectations: evidence from survey data on
inflation expectations,” Economic Journal, Vol. 114, 2004, 592-621.
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5. W. Branch, “Sticky information and model uncertainty in survey data on inflation expectations,”
Journal of Economic Dynamics and Control, Vol. 31, 2007, pp. 245 – 276.
G. E. Primiceri, “Why Inflation Rose and Fell: Policy-Makers’ Beliefs and U. S. Postwar
Stabilization Policy,” Quarterly Journal of Economics, 121, 2006, pp. 867 - 901.
T.J. Sargent, T. J., N. Williams, and T. Zha “Shocks and government Beliefs: the rise and fall of
American inflation,” American Economic Review, Vol. 96, 2006, pp. 1193 - 1224.
F. Milani, “Expectations, learning and macroeconomic persistence,” Journal of Monetary
Economics, Vol. 54, 2007, pp. 2065-2082.
F. Milani, “A Bayesian DSGE model with infinite-horizon learning: do ‘mechanical’ sources of
persistence become superfluous?”, International Journal of Central Banking, Iss. 6, September 2006.
F. Milani, “Expectation shocks and learning as drivers of the business cycle,” Economic Journal,
Vol. 121, 2011, pp. 379-401.
S. Slobodyan and R. Wouters, “Estimating a medium-scale DSGE model with expectations based
on small forecasting models,” American Economic Journal: Macroeconomics, Vol. 4, 2012, 65-101.
S. Slobodyan and R. Wouters, “Learning in an estimated DSGE model,” Journal of Economic
Dynamics and Control, Vol. 36, 2012, 26-46.
Hyperinflation
A. Marcet and J. P. Nicolini, “Recurrent hyperinflations and learning,” American Economic
Review, Vol. 93, 2003, pp. 1476-1498.
G.W. Evans, S. Honkapohja and R. Marimon, “Convergence in monetary inflation models with
heterogeneous learning rules,” Macroeconomic Dynamics, Vol. 5, 2001, 1-31.
K. Adam, G. W. Evans, S. Honkapohja, “Are hyperinflationary paths learnable?” Journal of
Economic Dynamics and Control, Vol. 30, 2006, 2725-2748.
Exchange rates and learning
K. Kasa, “Learning, large deviations and currency crises,” International Economic Review, Vol.
45, 2004, pp. 141-173.
L.-F. Zanna, “PPP rules, macroeconomic (in)stability and learning,” International Economic
Review , Vol. 50, 2009, 1103-1128.
A. Chakraborty and G. W. Evans, “Can perpetual learning explain the forward-premium
puzzle?”, Journal of Monetary Economics, Vol. 55, 2008, 477-490.
Y.S. Kim, “Exchange Rates and Fundamentals under Adaptive Learning,” Journal of Economic
Dynamics and Control, Vol. 33, 2008, pp. 843-863.
P. De Grauwe and M. Grimaldi, The Exchange Rate in a Behavioral Finance Framework, 2006,
Princeton University Press.
A. Markiewicz, “Model Uncertainty and exchange rate volatility,” International Economic
Review, Vol. 53, 2012, 815-844.
Monetary and fiscal policy interaction
B.T. McCallum, “Indeterminacy, bubbles and the fiscal theory of price level determination,”
Journal of Monetary Economics, Vol. 47, 2001, 19-30.
C. Giannitsarou, “Supply-side reforms and learning dynamics,” Journal of Monetary Economics,
Vol. 53, 2006, pp. 291-309.
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6. G.W. Evans and S. Honkapohja, “Policy interaction, learning and the fiscal theory of prices,”
Macroeconomic Dynamics, Vol. 11, 2007, 665 – 690.
W.A. Branch, T. Davig and B. McGough, “Monetary-Fiscal Policy Interactions under
Implementable Monetary Policy Rules,” Journal of Money, Credit and Banking, 40, 2008, 1095-1102.
S. Eusepi and B. Preston, “Debt, Policy Uncertainty and Expectations Stabilization”, Journal of
the European Economics Association, Vol. 10, 2012, 860-886.
Liquidity traps and deflation traps
J. Benhabib, S. Schmitt-Grohe and M. Uribe, “The perils of Taylor-rules,” Journal of Economic
Theory, Vol. 96, 2001, pp. 40-69.
G.B. Eggertsson and M. Woodford, “The Zero bound on interest rates and optimal monetary
policy, Brookings Papers on Economic Activity (1), 2003, 139-233.
G.W. Evans, E. Guse and S. Honkapohja, “Liquidity traps, learning and stagnation,” European
Economic Review, Vol. 52, 2008, 1438-1463.
G.W. Evans and S. Honkapohja, “Expectations, deflation Traps and macroeconomic policy,” in
Twenty Years of Inflation Targeting: Lessons Learned and Future Prospects, edited by D. Cobham, Ø.
Eitrheim, S. Gerlach and J.F. Qvigstad, Cambridge University Press, 2010, Ch. 11, 232-260.
G.W. Evans, “The stagnation regime of the New Keynesian model and recent US policy,” Ch. 3,
pp. 36-59, in Macroeconomics at the Service of Public Policy, ed. T. J. Sargent and J. Vilmunen, Oxford
University Press, 2013.
Dynamic predictor selection
W. A. Brock and C. H. Hommes, “A rational route to randomness,” Econometrica, Vol. 65, 1997,
1059-1095.
W. A. Branch and G. W. Evans, “Intrinsic heterogeneity in expectation formation,” Journal of
Economic Theory, Vol. 127, 2006, 264-295.
W. A. Branch and G. W. Evans, “Model uncertainty and endogenous volatility,” Review of
Economic Dynamics, Vol. 10, 2007, 158-166.
W. A. Branch and B. McGough, “Replicator dynamics in a cobweb model with rationally
heterogeneous expectations,” Journal of Economic Behavior and Organization, Vol. 65, 2008, 224-244.
W. Brock, C. Hommes, and F. Wagener, “More hedging instruments may destabilize markets,”
Journal of Economic Dynamics and Control, Vol. 33, 2009, 1912-1928.
C.H. Hommes, “The heterogeneous expectations hypothesis: some evidence from the lab,”
Journal of Economic Dynamics and Control, Vol. 35, 2011, 1-24.
C.H. Hommes, Behavioral Rationality and Heterogeneous Expectations in Complex Economic
Systems, Cambridge University Press, 2013.
Asset price bubbles and asset price volatility
A. G. Timmermann, “How Learning in Financial Markets Generates Excess Volatility and
Predictability in Stock Prices,” Quarterly Journal of Economics, 108, 1993, 1135-1145.
W. A. Brock and C. H. Hommes, “Heterogeneous beliefs and routes to chaos in a simple asset
pricing model,” Journal of Economic Dynamics and Control, Vol. 22, 1998, 1235-1274.
W. A. Branch and G. W. Evans, “Asset Return Dynamics and Learning,” Review of Financial
Studies, Vol. 51, 2010, 237-262.
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7. W. A. Branch and G. W. Evans, “Learning about Risk and Return: A Simple Model of Bubbles
and Crashes,” American Economic Journal: Macroeconomics, 3, 2011, 159-191.
K. Lansing, “Rational and near-rational bubbles without drift,” Economic Journal, 120, 2010, pp.
1149-1174.
J. Bullard, G. Evans and S. Honkapohja, “A model of near-rational exuberance,” Macroeconomic
Dynamics, Vol. 14, 2010, 166-188.
K. Adam, A. Marcet, and J. P. Nicolini, “Stock market volatility and learning,” 2008, mimeo.
K. Adam, P. Kuang and A. Marcet, “House price booms and the current account,” NBER
Macroeconomics Annual, 2011.
A. Fuster, B. Hebert and D. Laibson, “Natural expectations, macroeconomic dynamics and asset
pricing,” NBER Macroeconomics Annual 2011, Vol. 26.
B. LeBaron, “Heterogeneous gain learning and long swings in asset prices,” Ch 5 in Rethinking
Expectations: The Way Forward for Macroeconomics, R. Frydman and E. S. Phelps (eds.), Princeton
University Press, 2013.
Eductive learning
R. Guesnerie, “An Exploration of the eductive justification of the rational expectations
hypothesis,” American Economic Review, 82, 1992, p. 1254-1278
G. Evans and R. Guesnerie, “Rationalizability strong rationality and expectational
stability,” Games and Economic Behaviour, 5, 1993, p. 632-646.
Guesnerie, R., and J.-C. Rochet, “(De)stabilizing Speculation on Futures Markets: An Alternative
Viewpoint,” European Economic Review, 37, 1993, pp. 1043-1063.
G. Evans and R. Guesnerie, “Coordination on Saddle Path Solutions: the Eductive Viewpoint -
Linear Univariate Models,” Macroeconomic Dynamics, 7, 2003, pp.42-62.
G. Desgranges, P.Y. Geoffard and R. Guesnerie, “Do prices transmit rationally expected
information?” Journal of the European Economic Association, 1, 2003, pp. 124-153.
G. Evans, R. Guesnerie and B. McGough, “Eductive stability in real business cycle models,”
mimeo, 2013.
Misspecification and Restricted Perceptions Equilibria
LEM, Ch. 13.
E. Guse, “Learning in a misspecified multivariate self-referential linear stochastic model,”
Journal of Economic Dynamics and Control, Vol. 32, 2008, 1617-1542.
A. Fuster, D. Laibson, and B. Mendel, “Natural expectations and macroeconomic fluctuations,”
Journal of Economic Perspectives, Vol. 24, Fall 2010, 67-84.
C. Hommes and M. Zhu, “Behavioral learning equilibria,” Journal of Economic Theory, Vo1. 50,
2014, 778–814.
Miscellaneous papers
N. Jaimovich and S. Rebelo, “Can News about the Future Drive the Business Cycle?,” American
Economic Review, 99, 2009, p. 1097-1118.
M. Ellison and T.J. Sargent, “A Defence of the FOMC,” mimeo, 2011, forthcoming International
Economic Review.
L. Ball, Laurence, N. G. Mankiw, and R. Reis, 2005, “Monetary Policy for Inattentive
Economies,” Journal of Monetary Economics, 52, 703-725.
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8. C. Sims, “Implications of Rational Inattention,” Journal of Monetary Economics, Vol. 50, 2003,
pp. 665 - 690.
W.A. Branch, J. Carson, G.W. Evans and B. McGough, “Monetary Policy, Endogenous
Inattention, and the Volatility Trade-off,” Economic Journal, Vol. 119, 2009, pp. 123-157.
B.T. McCallum, “E-stability vis-à-vis Determinacy Results for a Broad Class of Linear Rational
Expectations Models,” Journal of Economic Dynamics and Control, Vol. 31, 2007, 1376-91.
C.A. Sims, “Solving Linear Rational Expectations Models,” Computational Economics, Vol. 20,
2001, 1-20.
C.A. Sims, “Rational Inattention and Monetary Economics,” Handbook of Monetary Economics,
eds. B. M. Friedman and M. Woodford, Vol. 3, Ch. 4, 2010.
R. Davies and P. Shea, “Adaptive Learning with a Unit Root: An Application to the Current
Account,” Journal of Economic Dynamics and Control, Vol. 34, 2010, 179-190.
J. Bullard and S. Eusepi, “When does Determinacy imply Expectational Stability?,” International
Economic Review, Vol. 55, 2014, 1-22.
G.W. Evans, S. Honkapohja and N. Williams “Generalized Stochastic Gradient Learning,”
International Economic Review, Vol. 51, 2010, pp. 237-262.
T. Cogley and T. J. Sargent, “Anticipated Utility and Rational Expectations as Approximations
of Bayesian Decision Making,” International Economic Review, 49, 2008, pp. 185-221.
M. Woodford, “Robustly optimal monetary policy with near-rational expectations,” American
Economic Review, Vol. 100, 2010, pp. 274-303.
M. Woodford, “Macroeconomic Analysis without the Rational Expectations Hypothesis,” Annual
Review of Economics, 2013.
K. Adam and A. Marcet, “Internal rationality, imperfect market knowledge and asset prices,”
Journal of Economic Theory, Vol. 146, 2011, 1224-1252.
P. De Grauwe, “Animal Spirits and Monetary Policy,” Economic Theory, Vol. 47, 2011, 423-
457.
P. Levine, J. Pearlman, G. Perendia and B. Yang, “Endogenous persistence in an estimated DSGE
model under imperfect information,” 2012, Economic Journal, Vol. 122, 1287-1312.
M. Ellison and J. Pearlman, “Saddlepath learning,” Journal of Economic Theory, Vol. 146, 2011,
1500-1519.
W. Xiao, “Adaptive Learning, Signal Extraction, and Macroeconomic Persistence,” mimeo, 2013.
A. Giusto, “Adaptive learning and distributional dynamics in an incomplete markets model,”
Journal of Economic Dynamics and Control, Vol. 40, 2014, 317-333.
Textbook Reference
George W. Evans and Seppo Honkapohja, Learning and Expectations in Macroeconomics, Princeton
University Press, Princeton NJ, 2001. (LEM)
LEM is available from amazon.com if for some reason the UO bookstore does not get it in time.
Grading. There will be several problem sets, a midterm exam and a paper. The midterm will count 40%,
the problem sets will count 25%, and the paper will count 35% of the grade. You can work on problem
sets together, but should write up your answers separately.
The paper should be based on an article or working paper connected with the course, either one of the
above papers, not covered in the lectures, or some other recent paper on macroeconomics and learning.
The list of papers above is quite incomplete. There are many good recent papers in this field. Your paper
should be a critical assessment of the article or working paper, with indications of significant omissions
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9. and suggestions for useful extensions. Ideally your paper would include some additional original material,
e.g. modest extensions of results in the paper or simulations that corroborate, extend or fail to verify
results given in the article or working paper. The grade for the paper will be based in part on a short
presentation during the last class meeting.
You can also look for papers on the websites of recent related conferences, in particular:
Expectations, Asset Bubbles and Financial Crises, Erasmus University, Rotterdam, September 2010
Expectations in Dynamic Macroeconomic Models, University of St Andrews, September 2011
International Network on Expectational Coordination, Paris Conference, 27-29 June 2012
Expectations in Dynamic Macroeconomic Models, Federal Reserve Bank of St Louis
Conference, August 2012
International Network on Expectational Coordination, New York Conference, February 2013
Workshop on Expectations and Macroeconomics, Banco de Espana, June 2013
International Network on Expectational Coordination, Paris Conference, June 2013
Expectations in Dynamic Macroeconomic Models, Federal Reserve Bank of San Francisco
Conference, August 2013
CDMA workshop on Macroeconomic Policy and Expectations, University of St Andrews,
September 2013.
Professor George Evans, 441 PLC. Phone: 346-4662. email:gevans ‘at’ uoregon.edu
Office hours: Tu 5:30 – 6:20 pm and W 9-9:50am.
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