Learning, Bounded Rationality and Macroeconomics

Some macroeconomic research projects in CIMF take the viewpoint of imperfect knowledge and bounded rationality in which consumers, firms and policy makers are assumed to gather information, make inferences and forecast on the basis of available data. As most economic decision are forward-looking, this behaviour feeds back into the data that economic agents obtain, and the mutual relation between behaviour and data generation can create economic fluctuations and even instability in the macro economy and in financial markets. Moreover, monetary and fiscal policy should be designed to mitigate the potential instability. Researchers in CIMF have made seminal contributions to this research area, which is internationally becoming a major research program in macroeconomics and CIMF research will contribute in a major way to this research effort.