Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/190329
Authors: 
Jang, Tae-Seok
Sacht, Stephen
Year of Publication: 
2018
Series/Report no.: 
Economics Working Paper 2018-10
Abstract: 
In this study, we analyze the macroeconomic dynamics under various shocks in two competing frameworks. Given the baseline New-Keynesian model, we compare the impulse response functions that stem from the hybrid version under rational expectations with the ones obtained in the forward-looking version under bounded rationality. For the latter, we assume heterogeneous agents who may adopt various forecast heuristics. We seek to understand which framework mimics real-world adjustments well and is therefore most suitable to describe economic adjustments over the business cycle.
Subjects: 
Bounded Rationality
Consumer Expectations
Forecast Heuristics
Impulse Response Functions
New-Keynesian Model
JEL: 
C53
D83
E12
E21
E32
Document Type: 
Working Paper
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