In fact, survey evidence about private sector expectations as well as the forecasting practice at central banks suggests that a considerable amount of learning takes place in the economy and that expectations seem to be quite heterogeneous among agents. Under learning, the transmission of economic disturbances is amplified and prolonged.
Learning may be a source of excess sensitivity of the economy to shocks compared to a situation where agents form model-consistent rational expectations. Moreover, long-term inflation expectations may over-react to shocks and drift endogenously, when disturbances can lead to a re-assessment by private agents of the functioning of the economy in general and the central bank’s behaviour in particular.