Behavioural New Keynesian models

Levine, Paul; Jump, Robert Calvert

Abstract

© 2018 This paper provides a bird's eye view of the behavioural New Keynesian literature. We discuss three key empirical regularities in macroeconomic data which are not accounted for by the standard New Keynesian model, namely, excess kurtosis, stochastic volatility, and departures from rational expectations. We then present a simple behavioural New Keynesian model that accounts for these empirical regularities in a straightforward manner. We discuss elaborations and extensions of the basic model, and suggest areas for future research.

• Journal Article Type: Article
• Acceptance Date: Nov 15, 2018
• Online Publication Date: Nov 20, 2018
• Publication Date: Mar 1, 2019
• Deposit Date: Jan 3, 2019
• Publicly Available Date: Nov 21, 2019
• Journal: Journal of Macroeconomics
• Print ISSN: 0164-0704
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 59
• Pages: 59-77
• DOI: https://doi.org/10.1016/j.jmacro.2018.11.002
• Keywords: behavioural macroeconomics, heterogeneous expectations, bounded rationality
• Public URL: https://uwe-repository.worktribe.com/output/849697
• Publisher URL: https://doi.org/10.1016/j.jmacro.2018.11.002
• Additional Information: Additional Information : This is the author's accepted manuscript. The final published version is available here: https://doi.org/10.1016/j.jmacro.2018.11.002.
• Contract Date: Jan 3, 2019