Ascherman, Sarah2020-08-282020-052020-06-172020Ascherman, Sarah. 2020. The Effect of Monetary Policy on Output According to BHANK. Bachelor's thesis, Harvard College.https://nrs.harvard.edu/URN-3:HUL.INSTREPOS:37364691The 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.application/pdfenThesis or Dissertation2020-08-28