Data and Code for: Short-Term Planning, Monetary Policy, and Macroeconomic Persistence

Principal Investigator(s): View help for Principal Investigator(s) Christopher Gust, Board of Governors of the Federal Reserve System; Edward Herbst, Board of Governors of the Federal Reserve System; David Lopez-Salido, Board of Governors of the Federal Reserve System

Version: View help for Version V1

Name	File Type	Size	Last Modified
short-term-planning-replication			05/11/2021 05:47:PM

Project Citation:

Gust, Christopher , Herbst, Edward , and Lopez-Salido, David . Data and Code for: Short-Term Planning, Monetary Policy, and Macroeconomic Persistence. Nashville, TN: American Economic Association [publisher], 2022. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2022-09-28. https://doi.org/10.3886/E130329V1

Project Description

Summary: We estimate a behavioral New Keynesian (NK) model in which households and firms plan over a finite horizon. The finite-horizon planning (FHP) model outperforms rational expectations versions of the NK model as well as other behavioral NK models. In the FHP model, households and firms are forward-looking in thinking about events over their planning horizon but are backward looking regarding events beyond that point. This gives rise to substantial aggregate persistence without resorting to additional features such as habit persistence and price contracts indexed to lagged inflation.

Scope of Project

Subject Terms: Finite-horizon planning; learning ; Bayesian Estimation

JEL Classification:
      C11 Bayesian Analysis: General
      E52 Monetary Policy
      E70 Macro-Based Behavioral Economics: General

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Published Versions

V1 [2022-09-28]

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