Arbeitspapier

Precautionary saving and un-anchored expectations

This paper investigates monetary policy in a heterogeneous agent new Keynesian (HANK) model where agents face idiosyncratic income risk and use adaptive learning in order to form their expectations. Households experience different histories and observe different idiosyncratic variables. This gives rise to idiosyncratic learning processes, which naturally implies the existence of heterogeneous expectations. In HANK models, supply shocks generate precautionary saving. The learning setup amplifies this effect and can result in long-lasting disinflationary traps. Dovish Taylor rules focused on closing the output gap dampen the learning effects. Price level targeting improves the inflation and output stabilization trade-off by better anchoring expectations.

Sprache
Englisch

Erschienen in
Series: ECON WPS - Working Papers in Economic Theory and Policy ; No. 08/2021

Klassifikation
Wirtschaft
Aggregate Factor Income Distribution
Price Level; Inflation; Deflation
Monetary Policy
Macro-Based Behavioral Economics: General‡
Thema
adaptive learning
precautionary saving
restricted perception equilibrium
heterogeneous expectations
heterogeneous agent

Ereignis
Geistige Schöpfung
(wer)
Grimaud, Alex
Ereignis
Veröffentlichung
(wer)
TU Wien, Institute of Statistics and Mathematical Methods in Economics, Research Unit in Economics
(wo)
Vienna
(wann)
2021

Handle
Letzte Aktualisierung
10.03.2025, 11:45 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Grimaud, Alex
  • TU Wien, Institute of Statistics and Mathematical Methods in Economics, Research Unit in Economics

Entstanden

  • 2021

Ähnliche Objekte (12)