Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/277387 
Authors: 
Year of Publication: 
2017
Citation: 
[Journal:] European Journal of Economics and Economic Policies: Intervention (EJEEP) [ISSN:] 2052-7772 [Volume:] 14 [Issue:] 2 [Year:] 2017 [Pages:] 186-199
Publisher: 
Edward Elgar Publishing, Cheltenham
Abstract: 
This paper sketches the history of behavioral macroeconomics and presents four current approaches in the literature: the ad hoc behavioral approach, partial behavioral macroeconomic models, experimental macroeconomics, and behavioral DSGE models. Much of this literature is still patchwork, with a focus on isolated aspects but little theoretical integration. I argue that integrating behavioral features into New Keynesian DSGE models is not convincing because of fundamental problems of the DSGE approach. A better way to use research from behavioral economics for more realistic macroeconomic models is to turn to complexity economics and agent-based modeling. Complexity economics and behavioral economics are linked in a very natural way, since both emphasize the direct interaction of heterogeneous agents that are boundedly rational. Behavioral and complexity macroeconomics is a promising new approach that might make mainstream macroeconomics more realistic and relevant again.
Subjects: 
bounded rationality
methodology
microfoundations
representative agents
JEL: 
B41
B50
E03
C63
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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