{"title":"Behavior of Economic Agents With Bounded Rationality in a Semi-open New Keynesian Model","authors":"L. Serkov","doi":"10.18288/1994-5124-2024-3-44-75","DOIUrl":null,"url":null,"abstract":"The purpose of the article is to analyze the behavior of economic agents with limited rationality in a New Keynesian model which postulates that imported equipment and technology are one of the factors of production and that households consume only domestic products. Economic agents’ expectations are based on stationary values for the output gap and inflation and also on extrapolation of the latest available data on these variables. The weighted shares of agents applying these rules change endogenously. Histograms of the frequency distribution of the degree of optimism and the impulse responses of monetary policy shocks and technology shocks to the variables under study indicate that a less open economy tends to undergo an economic cycle with a smaller amplitude than a more rigid economy. An analysis of the trade-offs between inflation volatility and the output gap established their non-linear nature (in contrast to standard models with rational expectations). The results from analysis of trade-offs was that stabilization of inflation in models with limited rational expectations requires an increased interest rate reaction compared to a similar reaction for a model in which agents have rational expectations. The results obtained may be useful in designing monetary policy to stabilize inflation and output gaps.","PeriodicalId":4,"journal":{"name":"ACS Applied Energy Materials","volume":"49 12","pages":""},"PeriodicalIF":5.4000,"publicationDate":"2024-07-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"ACS Applied Energy Materials","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.18288/1994-5124-2024-3-44-75","RegionNum":3,"RegionCategory":"材料科学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"CHEMISTRY, PHYSICAL","Score":null,"Total":0}
引用次数: 0
Abstract
The purpose of the article is to analyze the behavior of economic agents with limited rationality in a New Keynesian model which postulates that imported equipment and technology are one of the factors of production and that households consume only domestic products. Economic agents’ expectations are based on stationary values for the output gap and inflation and also on extrapolation of the latest available data on these variables. The weighted shares of agents applying these rules change endogenously. Histograms of the frequency distribution of the degree of optimism and the impulse responses of monetary policy shocks and technology shocks to the variables under study indicate that a less open economy tends to undergo an economic cycle with a smaller amplitude than a more rigid economy. An analysis of the trade-offs between inflation volatility and the output gap established their non-linear nature (in contrast to standard models with rational expectations). The results from analysis of trade-offs was that stabilization of inflation in models with limited rational expectations requires an increased interest rate reaction compared to a similar reaction for a model in which agents have rational expectations. The results obtained may be useful in designing monetary policy to stabilize inflation and output gaps.
期刊介绍:
ACS Applied Energy Materials is an interdisciplinary journal publishing original research covering all aspects of materials, engineering, chemistry, physics and biology relevant to energy conversion and storage. The journal is devoted to reports of new and original experimental and theoretical research of an applied nature that integrate knowledge in the areas of materials, engineering, physics, bioscience, and chemistry into important energy applications.