The (ir)relevance of rule-of-thumb consumers for US business cycle fluctuations

Alice Albonico, Guido Ascari and Qazi Haque

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: We estimate a medium-scale model with and without rule-of-thumb consumers over the pre- Volcker and the Great Moderation periods, allowing for indeterminacy. Passive monetary policy and sunspot fluctuations characterize the pre-Volcker period for both models. The estimated fraction of rule-of-thumb consumers is low, such that the models are empirically almost equivalent. In both subsamples, the two models yield very similar impulse response functions, variance and historical decompositions. We conclude that rule-of-thumb consumers are irrelevant to explain aggregate U.S. business cycle fluctuations

Keywords: rule-of-thumb consumers; indeterminacy; business cycle fluctuations (search for similar items in EconPapers)
JEL-codes: C11 C13 E32 E52 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2020-11
New Economics Papers: this item is included in nep-dge, nep-mac and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The (Ir)Relevance of Rule‐of‐Thumb Consumers for U.S. Business Cycle Fluctuations (2024)
Working Paper: The (Ir)Relevance of Rule-of-Thumb Consumers for U.S. Business Cycle Fluctuations (2022)
Working Paper: The (Ir)Relevance of Rule-of-Thumb Consumers for U.S. Business Cycle Fluctuations (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2020-102

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