Details

Autor(en) / Beteiligte

• Farmer, Roger EA
• Platonov, Konstantin

Titel

Animal Spirits in a Monetary Model

Ist Teil von

• NBER Working Paper Series, 2016-03, p.22136

Ort / Verlag

Cambridge: National Bureau of Economic Research, Inc

Erscheinungsjahr

2016

Link zum Volltext

Quelle

NBER Working Papers

Beschreibungen/Notizen

• Working Paper No. 22136 We integrate Keynesian economics with general equilibrium theory in a new way. Our approach differs from the prevailing New Keynesian paradigm in two ways. First, our model displays steady state indeterminacy. This feature allows us to explain persistent unemployment which we model as movements among the steady state equilibria of our model. Second, our model displays dynamic indeterminacy. This feature allows us to explain the real effects of nominal shocks by selecting a dynamic equilibrium where prices are slow to respond to unanticipated money supply disturbances. Price rigidity arises as part of a rational expectations equilibrium in which the equilibrium is selected by beliefs. To close our model, we introduce a new fundamental that we refer to as the belief function.