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Behavioural New Keynesian Models

Author

Listed:
  • Robert Calvert Jump

    (University of the West of England)

  • Paul Levine

    (University of Surrey and CIMS)

Abstract

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 ac- counted for by the standard New Keynesian model, namely, excess kurtosis, stochastic volatility, and departures from rational expectations. We then present a simple be- havioural 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.

Suggested Citation

  • Robert Calvert Jump & Paul Levine, 2019. "Behavioural New Keynesian Models," School of Economics Discussion Papers 0219, School of Economics, University of Surrey.
    • Handle: RePEc:sur:surrec:0219
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    File URL: https://repec.som.surrey.ac.uk/2019/DP02-19.pdf
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Behavioural New Keynesian Models
      by Christian Zimmermann in NEP-DGE blog on 2019-03-03 04:24:55

    Citations

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    Cited by:

    1. Deak, S. & Levine, P. & Mirza, A. & Pearlman, J., 2019. "Designing Robust Monetary Policy Using Prediction Pools," Working Papers 19/11, Department of Economics, City St George's, University of London.
    2. Paul Grauwe & Pasquale Foresti, 2025. "Deflationary traps, agents’ beliefs and fiscal–monetary policies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 80(3), pages 941-964, November.
    3. Samuele Ridolfi, 2024. "Behavioral Macroeconomics: A Systematic Review for Policy Insights," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 8(S2), pages 35-42, December.
    4. Masciandaro, Donato & Russo, Riccardo, 2024. "Monetary and macroprudential policies: How to Be green? A political-economy approach," Economic Modelling, Elsevier, vol. 141(C).
    5. Ilabaca, Francisco & Milani, Fabio, 2021. "Heterogeneous expectations, indeterminacy, and postwar US business cycles," Journal of Macroeconomics, Elsevier, vol. 68(C).
    6. Herrera, Luis & Vázquez, Jesús, 2025. "Learning from news," Journal of Macroeconomics, Elsevier, vol. 85(C).
    7. Beqiraj, Elton & Di Bartolomeo, Giovanni & Di Pietro, Marco, 2019. "Beliefs formation and the puzzle of forward guidance power," Journal of Macroeconomics, Elsevier, vol. 60(C), pages 20-32.
    8. Jonathan Leightner, 2022. "Using Variable Slope Total Derivative Estimations to Pick between and Improve Macro Models," JRFM, MDPI, vol. 15(6), pages 1-13, June.
    9. De Grauwe, Paul & Foresti, Pasquale, 2023. "Interactions of fiscal and monetary policies under waves of optimism and pessimism," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 466-481.
    10. Calvert Jump, Robert & Hommes, Cars & Levine, Paul, 2019. "Learning, heterogeneity, and complexity in the New Keynesian model," Journal of Economic Behavior & Organization, Elsevier, vol. 166(C), pages 446-470.
    11. Chetan Dave & Marco M. Sorge, 2025. "Fat‐tailed DSGE models: A survey and new results," Journal of Economic Surveys, Wiley Blackwell, vol. 39(1), pages 146-171, February.
    12. Deák, Szabolcs & Levine, Paul & Pham, Son T., 2024. "Simple mandates, monetary rules, and trend-inflation," Macroeconomic Dynamics, Cambridge University Press, vol. 28(4), pages 757-790, June.
    13. Dong, Xue & Minford, Patrick & Meenagh, David & Yang, Xiaoliang, 2023. "Bounded rational expectation: How it can affect the effectiveness of monetary rules in the open economy," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 88(C).
    14. Shobande Olatunji Abdul & Shodipe Oladimeji Tomiwa, 2019. "New Keynesian Liquidity Trap and Conventional Fiscal Stance: An Estimated DSGE Model," Economics and Business, Sciendo, vol. 33(1), pages 152-169, January.
    15. Robert Calvert Jump & Engelbert Stockhammer, 2023. "Building blocks of a heterodox business cycle theory," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 46(2), pages 334-358, April.
    16. Franke, Reiner, 2022. "An empirical test of a fundamental Harrod-Kaldor business cycle model," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 1-14.
    17. Karsten Kohler & Robert Calvert Jump, 2022. "Estimating Nonlinear Business Cycle Mechanisms with Linear Vector Autoregressions: A Monte Carlo Study," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(5), pages 1077-1100, October.
    18. Annicchiarico, Barbara & Di Dio, Fabio & Diluiso, Francesca, 2024. "Climate actions, market beliefs, and monetary policy," Journal of Economic Behavior & Organization, Elsevier, vol. 218(C), pages 176-208.
    19. Anderson Grajales-Olarte & Franz Hamann & Sara Naranjo-Saldarriaga & José Pulido, 2025. "Policy implications of losing credibility: Lessons from Colombia’s post-pandemic inflationary surge," Borradores de Economia 1304, Banco de la Republica de Colombia.
    20. De Grauwe, Paul & Foresti, Pasquale, 2020. "Animal Spirits and Fiscal Policy," Journal of Economic Behavior & Organization, Elsevier, vol. 171(C), pages 247-263.
    21. Sorge, Marco M., 2021. "Stabilizing Taylor rules and determinacy under unit root supply shocks: A re-examination," Journal of Macroeconomics, Elsevier, vol. 68(C).
    22. Olatunji Abdul Shobande & Oladimeji Tomiwa Shodipe, 2021. "Monetary Policy Interdependency in Fisher Effect: A Comparative Evidence," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 10(1), pages 203-226.

    More about this item

    JEL classification:

    • E70 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - General
    • E71 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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