Work detail

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.
Consultants:
Work type: Bachelors
Language: English
Pages: 70
Awards and prizes:
Link:
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.

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