Social learning expectations: microfoundations and a Dynare toolbox

Alex Grimaud, Isabelle Salle, Gauthier Vermandel

Publication: Working/Discussion PaperWU Working Paper

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Social learning (SL) is a behavioral model in which expectations and the resulting aggregate dynamics stem from the interactions of a large amount of heterogeneous agents. Nonetheless, this framework has so far lacked micro-foundations and a general-solution method. This paper bridges these two gaps with: (i) a micro-founded New Keynesian model with social learning expectations; (ii) a general solution method that we implement in a Dynare toolbox that solves any linear state-space model with SL expectations. The resulting framework provides a self-contained tool to contrast policy analysis under SL and rational expectations. As an illustration, optimal monetary policy rules are studied under the two expectation regimes.
Original languageEnglish
PublisherWU Vienna University of Economics and Business
Publication statusPublished - Jul 2023

Publication series

SeriesDepartment of Economics Working Paper Series

WU Working Paper Series

  • Department of Economics Working Paper Series


  • Inflation targeting
  • Monetary policy
  • Heterogeneous expectations

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