Central banks' new inflation rules can fail if people don't learn them before a crisis

This paper models how people learn new central bank strategies. It finds that big economic shocks can stop people from understanding these new rules, making it harder for central banks to hit their inflation targets.

Central banks have been trying new ways to manage inflation, like targeting average inflation over time. This paper shows these new approaches are not automatically understood by the public. If people do not grasp the new rules, the central bank's actions might not have the intended effect, especially when the economy is unstable.