Bounded rationality and heterogeneous expectations: Euler versus anticipated-utility approach
Abstract
By using Bayesian techniques, our paper investigates behavioral New-Keynesian DSGE models derived under two parsimonious alternatives to introduce heterogeneous expectations: the Euler equation and the anticipated-utility approach. First, we explore the relation between the expectation formation processes and the model determinacy for a broad range of parameterizations by using global sensitivity analysis and Monte Carlo filtering. Second, we...
Paper Details
Title
Bounded rationality and heterogeneous expectations: Euler versus anticipated-utility approach
Published Date
May 2, 2020
Journal
Volume
130
Issue
3
Pages
249 - 273
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