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The recent macroeconomic literature stresses the importance of managing heterogeneous expectations in the formulation of monetary policy. We use a simple frictionless dynamic stochastic general equilibrium (DSGE) model to investigate inflation dynamics under alternative interest rate rules when agents have heterogeneous expectations, and update their beliefs based on past performance, as in Brock and Hommes [Econometrica 65 (5) , 1059-1095 (1997)]. The stabilizing effect of different monetarydoi:10.1017/s1365100512000223 fatcat:7fymgygumvflpnhzsxzd2vhlj4