eBook - ePub

Lectures on Behavioral Macroeconomics

Name: Lectures on Behavioral Macroeconomics
ISBN: 9781400845378

Paul De Grauwe,

152 pages
English
ePUB (mobile friendly)
Available on iOS & Android

eBook - ePub

Lectures on Behavioral Macroeconomics

Paul De Grauwe,

About this book

In mainstream economics, and particularly in New Keynesian macroeconomics, the booms and busts that characterize capitalism arise because of large external shocks. The combination of these shocks and the slow adjustments of wages and prices by rational agents leads to cyclical movements. In this book, Paul De Grauwe argues for a different macroeconomics model--one that works with an internal explanation of the business cycle and factors in agents' limited cognitive abilities. By creating a behavioral model that is not dependent on the prevailing concept of rationality, De Grauwe is better able to explain the fluctuations of economic activity that are an endemic feature of market economies. This new approach illustrates a richer macroeconomic dynamic that provides for a better understanding of fluctuations in output and inflation.

De Grauwe shows that the behavioral model is driven by self-fulfilling waves of optimism and pessimism, or animal spirits. Booms and busts in economic activity are therefore natural outcomes of a behavioral model. The author uses this to analyze central issues in monetary policies, such as output stabilization, before extending his investigation into asset markets and more sophisticated forecasting rules. He also examines how well the theoretical predictions of the behavioral model perform when confronted with empirical data.

Develops a behavioral macroeconomic model that assumes agents have limited cognitive abilities

Shows how booms and busts are characteristic of market economies

Explores the larger role of the central bank in the behavioral model

Examines the destabilizing aspects of asset markets

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Yes, you can access Lectures on Behavioral Macroeconomics by Paul De Grauwe in PDF and/or ePUB format, as well as other popular books in Economics & Consumer Behaviour. We have over one million books available in our catalogue for you to explore.