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7.4 Behavioral macroeconomics There has been a recent interest in behavioral macroeconomics. It is too early to present a comprehensive survey of this literature. Themes includes rules of thumb (Campbell and Mankiw 1989), limited information updating (Caballero 1995, Gabaix and Laibson 2002, Mankiw and Reis 2002, Reis 2006a), and noisy signals (Sims 2003, Ma´ckowiak and Wiederholt 2015). A small but growing literature in theoretical macroeconomics draws consequences for general equilibrium and policy from features like inattention and imperfect information (Woodford 2013; Garc´ıa-Schmidt and Woodford 2015; Angeletos and Lian 2017, 2016; Farhi and Werning 2017; Bordalo, Gennaioli, and Shleifer 2016). For instance, Gabaix (2016b) presents a behavioral version of the textbook New Keynesian model, which gives a way to model monetary and fiscal policy with behavioral agents. We can expect this literature to grow in the future.
The paper is an NBER paper which may be gated for you.
BEHAVIORAL INATTENTION
Xavier Gabaix
Working Paper 24096 http://www.nber.org/papers/w24096 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 December 2017
Draft chapter for the Handbook of Behavioral Economics, edited by Douglas Bernheim, Stefano DellaVigna and David Laibson.
7.4 Behavioral macroeconomics There has been a recent interest in behavioral macroeconomics. It is too early to present a comprehensive survey of this literature. Themes includes rules of thumb (Campbell and Mankiw 1989), limited information updating (Caballero 1995, Gabaix and Laibson 2002, Mankiw and Reis 2002, Reis 2006a), and noisy signals (Sims 2003, Ma´ckowiak and Wiederholt 2015). A small but growing literature in theoretical macroeconomics draws consequences for general equilibrium and policy from features like inattention and imperfect information (Woodford 2013; Garc´ıa-Schmidt and Woodford 2015; Angeletos and Lian 2017, 2016; Farhi and Werning 2017; Bordalo, Gennaioli, and Shleifer 2016). For instance, Gabaix (2016b) presents a behavioral version of the textbook New Keynesian model, which gives a way to model monetary and fiscal policy with behavioral agents. We can expect this literature to grow in the future.
The paper is an NBER paper which may be gated for you.
BEHAVIORAL INATTENTION
Xavier Gabaix
Working Paper 24096 http://www.nber.org/papers/w24096 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 December 2017
Draft chapter for the Handbook of Behavioral Economics, edited by Douglas Bernheim, Stefano DellaVigna and David Laibson.