Heterogeneous Expectations in An Estimated Medium-Scale DSGE Model

DOI

10.2991/sschd-17.2017.98How to use a DOI?

Keywords

New Keynesian model; Heterogeneous expectations; Adaptive learning.

Abstract

This paper incorporates adaptive learning and heterogeneous expectations into the traditional rational expectation medium-scale DSGE model. In our model, some agents make mistakes when forecasting future macroeconomics variables, while other agents have rational expectations, so the expectations present heterogeneity. The estimation and simulation results of our model show that: (1) Public expectations in China are dominated by the adaptive learning behaviors; (2) Heterogeneous expectation behaviors reduce the responses of inflation and output to the money supply shock. Technology shock contributes most fluctuations in inflation, and investment shock plays an important role in explaining the output fluctuations.

Copyright

© 2017, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Wei Zhao
PY  - 2017/09
DA  - 2017/09
TI  - Heterogeneous Expectations in An Estimated Medium-Scale DSGE Model
BT  - Proceedings of the 3rd Annual International Conference on Social Science and Contemporary Humanity Development
PB  - Atlantis Press
SP  - 514
EP  - 519
SN  - 2352-5398
UR  - https://doi.org/10.2991/sschd-17.2017.98
DO  - 10.2991/sschd-17.2017.98
ID  - Zhao2017/09
ER  -