Slow Learning

June 2026

Slow Learning

Lawrence J. Christiano, Martin Eichenbaum, and Benjamin K. Johannsen

Abstract:

This paper provides an analytic characterization of the speed of convergence under learning to a rational expectations equilibrium (REE) for a large class of multivariate models. We show that learning is slower when people's beliefs about model outcomes are more self-fulfilling. The paper also investigates which features of a model economy make beliefs more self-fulfilling, using variants of the simple new-Keynesian model and a medium-scale DSGE model. For empirically plausible specifications of these models, convergence of a learning equilibrium to the REE is so slow that analysis based on rational expectations can be misleading.

Keywords: Learning, New-Keynesian Model

DOI: https://doi.org/10.17016/FEDS.2026.039

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