Monetary Policy Under Behavioral Expectations: An Empirical Validation of the Heuristic Switching Model
|Author:||Bc. Sergey Bolshakov|
|Year:||2020 - summer|
|Leaders:|| PhDr. Jiří Kukačka Ph.D.
|Work type:|| Bachelors
|Awards and prizes:||Deloitte Outstanding Thesis Award|
|Abstract:||This work takes one of the most prominent behavioral New-Keynesian models
from the shelf and estimates it via the simulated method of moments. The
model exhibits a remarkably good ft to the auto- and cross-covariance profles of the euro area macroeconomic time series, especially compared to the
standard rational expectations model. This result corroborates the claim that
central banks which implement strict infation targeting are better of reacting
to the output gap, on top of infation.