Should-Read: George W. Evans, Seppo Honkapohja, and Kaushik Mitra: Expectations, Stagnation and Fiscal Policy: “Persistent stagnation and fiscal policy are examined in a New Keynesian model with adaptive learning determining expectations… http://www.bankofengland.co.uk/research/Documents/conferences/conference03040717/expectationspolicy.pdf …We impose inflation and consumption lower bounds, which can be relevant when agents are pessimistic. The inflation target is locally but not globally … Continue reading Should-Read: George W. Evans, Seppo Honkapohja, and Kaushik Mitra: Expectations, Stagnation and Fiscal Policy