We estimate a medium-scale model with and without rule-of-thumb consumers over the pre-Volcker and the Great Moderation periods, allowing for indeterminacy. Passive monetary policy and sunspot fluctuations characterize the pre-Volcker period for both models. In both subsamples, the estimated fraction of rule-of-thumb consumers is low, such that the two models are empirically almost equivalent; they yield very similar impulse response functions, variance, and historical decompositions. We conclude that rule-of-thumb consumers are irrelevant to explain aggregate U.S. business cycle fluctuations.

Albonico, A., Ascari, G., Haque, Q. (2023). The (Ir)Relevance of Rule-of-Thumb Consumers for U.S. Business Cycle Fluctuations. JOURNAL OF MONEY, CREDIT, AND BANKING [10.1111/jmcb.13057].

The (Ir)Relevance of Rule-of-Thumb Consumers for U.S. Business Cycle Fluctuations

Albonico A.
;
2023

Abstract

We estimate a medium-scale model with and without rule-of-thumb consumers over the pre-Volcker and the Great Moderation periods, allowing for indeterminacy. Passive monetary policy and sunspot fluctuations characterize the pre-Volcker period for both models. In both subsamples, the estimated fraction of rule-of-thumb consumers is low, such that the two models are empirically almost equivalent; they yield very similar impulse response functions, variance, and historical decompositions. We conclude that rule-of-thumb consumers are irrelevant to explain aggregate U.S. business cycle fluctuations.
Articolo in rivista - Articolo scientifico
business cycle fluctuations; indeterminacy; rule-of-thumb consumers;
English
3-mag-2023
2023
open
Albonico, A., Ascari, G., Haque, Q. (2023). The (Ir)Relevance of Rule-of-Thumb Consumers for U.S. Business Cycle Fluctuations. JOURNAL OF MONEY, CREDIT, AND BANKING [10.1111/jmcb.13057].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/416577
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