Abstract: The aim of the paper is to analyze changes and peculiarities of behavior of economic agents with bounded rationality in the New Keynesian model, in which imported equipment and technology are one of the factors of production, and households consume only domestic products. The formation of output gap and inflation expectations by agents is based on stationary values of these variables and on extrapolation of the latest available data on inflation and the output gap. The weight shares of agents applying these rules change endogenously. Histograms of the frequency distribution of the degree of buoyancy and the impulse responses of monetary policy shocks and technology shocks to the variables under study show that a less open economy tends to go through an economic cycle with a smaller amplitude than a more rigid economy. Analyses of the trade-offs between the volatility of inflation and the output gap at different parameter values in the Taylor rule show their non-linear nature (in contrast to standard models with rational expectations). An important result obtained in this analysis is that the rational expectations hypothesis is more consistent with a closed economy than with an open one.

Cite: Serkov L. , Krasnykh S.
Peculiarity of Behavior of Economic Agents under Cognitive Constraints in a Semi-Open New Keynesian Model
Mathematics. 2024. Т.12. №1. 95 :1-22. DOI: 10.3390/math12010095 WOS Scopus РИНЦ OpenAlex

Dates:

Submitted:	Oct 17, 2023
Accepted:	Dec 26, 2023
Published print:	Dec 27, 2023
Published online:	Dec 27, 2023

Identifiers:

Web of science:	WOS:001140550200001
Scopus:	2-s2.0-85182149278
Elibrary:	64329368
OpenAlex:	W4390275219

Citing: Пока нет цитирований

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