The Effect of Monetary Policy on Output According to BHANK
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Ascherman, Sarah
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Ascherman, Sarah. 2020. The Effect of Monetary Policy on Output According to BHANK. Bachelor's thesis, Harvard College.Abstract
The goal of this thesis is to study whether, and by how much, economic output is affected by monetary policy when agents are rational or behavioral through a Behavioral Heterogeneous Agent New Keynesian (BHANK) model. First, we present the behavioral new Keynesian (BNK) and traditional Heterogeneous Agent New Keynesian (HANK) models. Second, we introduce a myopia parameter to reflect how agents foresee future change in prices, dividends, and interest rates in BHANK. Third, we investigate the output deviation from its steady state response following a monetary policy shock, and quantify the results to assess how myopia impacts central bank policy effectiveness. Finally, we provide insight on possible policy ramifications.Terms of Use
This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAACitable link to this page
https://nrs.harvard.edu/URN-3:HUL.INSTREPOS:37364691
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