Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103186
Authors: 
Menz, Jan-Oliver
Year of Publication: 
2008
Series/Report no.: 
DEP (Socioeconomics) Discussion Papers, Macroeconomics and Finance Series 4/2008
Abstract: 
The contribution of this paper is twofold. First, a thorough presentation of the state of the art of the New Keynesian Macroeconomic model is provided. A discussion of its empirical caveats follows and some recent extensions of the standard model are evaluated in more detail. Second, a key insight of Behavioral Economics, hyperbolic discounting, is used for the derivation of the IS Curve. It is argued that this approach is more appropriate than the usual praxis of allowing for a rule-of-thumb agent in an otherwise standard optimization framework.
Subjects: 
Behavioral Economics
New Keynesian Model
Rule-of-Thumbs
Hyperbolic Discounting
JEL: 
D91
E21
D8
D03
Document Type: 
Working Paper

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