The (Ir)Relevance of Rule-of-Thumb Consumers for U.S. Business Cycle Fluctuations

Alice Albonico, Guido Ascari and Qazi Haque

No 453, Working Papers from University of Milano-Bicocca, Department of Economics

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. In both subsamples, the estimated fraction of rule-of-thumb consumers is low, such that the two models are empirically almost equivalent; they 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: 46
Date: 2020-11, Revised 2022-10
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)

Downloads: (external link)
http://repec.dems.unimib.it/repec/pdf/mibwpaper453.pdf (application/pdf)

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 US business cycle fluctuations (2020)
Working Paper: The (Ir)Relevance of Rule-of-Thumb Consumers for U.S. Business Cycle Fluctuations (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mib:wpaper:453

Access Statistics for this paper

More papers in Working Papers from University of Milano-Bicocca, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Matteo Pelagatti ().