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Behavioral Macroeconomics and the New Keynesian Model

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Author Info
Jan-Oliver Menz () (Department for Economics and Politics, University of Hamburg)

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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.

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File URL: http://www.wiso.uni-hamburg.de/hepdoc/macppr_4_2008.pdf
File Format: application/pdf
File Function: First version, 2008
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Publisher Info
Paper provided by Hamburg University, Department Wirtschaft und Politik in its series Macroeconomics and Finance Series with number 200804.

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Length: 24 pages
Date of creation: Dec 2008
Date of revision:
Handle: RePEc:hep:macppr:200804

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Web page: http://www.wiso.uni-hamburg.de/dwp
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Related research
Keywords: Behavioral Economics; New Keynesian Model; Rule-of-Thumbs; Hyperbolic Discounting;

Find related papers by JEL classification:
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
D8 - Microeconomics - - Information, Knowledge, and Uncertainty
D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles

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This page was last updated on 2009-12-4.

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