Behavioural New Keynesian Models

27 Pages Posted: 20 Jun 2018

See all articles by Robert Jump

Robert Jump

University of the West of England (UWE) - Department of Accounting, Economics, and Finance

Paul Levine

School of Economics, University of Surrey

Date Written: May 31, 2018

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 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.

Keywords: behavioural macroeconomics, heterogeneous expectations, bounded rationality

JEL Classification: E70, E71, E30, E32

Suggested Citation

Jump, Robert and Levine, Paul L., Behavioural New Keynesian Models (May 31, 2018). Available at SSRN: https://ssrn.com/abstract=3197470 or http://dx.doi.org/10.2139/ssrn.3197470

Robert Jump

University of the West of England (UWE) - Department of Accounting, Economics, and Finance ( email )

Blackberry Hill Bristol
Bristol, Avon BS16 1QY
United Kingdom

Paul L. Levine (Contact Author)

School of Economics, University of Surrey ( email )

Guildford
Surrey GU2 7XH
United Kingdom
+44 1483 259 380 Ext. 2773 (Phone)
+44 1483 259 548 (Fax)

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