A new paper in the Federal Reserve’s Finance and Economics Discussion Series examines the speed of learning in economic models. The study, authored by Lawrence J. Christiano, Martin Eichenbaum, and Benjamin K. Johannsen, analytically characterizes how quickly agents converge to a rational expectations equilibrium (REE). It finds that learning is slower when people’s beliefs about model outcomes are more self‑fulfilling. The researchers test this effect using variations of a simple New‑Keynesian framework and a medium‑scale DSGE model. For empirically plausible specifications, the paper reports that convergence to the REE can be very slow, suggesting that analyses based on rational expectations alone may sometimes be misleading. The research is available under DOI https://doi.org/10.17016/FEDS.2026.039.
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