Recognising that the economy is a complex system with boundedly rational interacting
agents, the book presents a theory of behavioral rationality and heterogeneous expectations …

This paper derives a general New Keynesian framework with heterogeneous expectations
by explicitly solving the micro-foundations underpinning the model. The resulting reduced …

The recent macroeconomic literature stresses the importance of managing heterogeneous
expectations in the formulation of monetary policy. We use a simple frictionless dynamic …

This paper introduces dynamic predictor selection into a New Keynesian model with
heterogeneous expectations and examines its implications for monetary policy. We extend …

In this article we develop and estimate a behavioral model of inflation dynamics with
heterogeneous firms. In our stylized framework there are two groups of price setters …

In this paper we address the question of how individuals form expectations and invent,
reinforce, and update their forecasting rules in a complex world. We do so by fitting a novel …

With the help of two examples, this chapter illustrates the usefulness of agent-based models
as tools for economic policy design. The first example applies a financial market model in …

The motivation of this paper is to understand the effects of coupling a macroeconomic model
of inflation rate dynamics, relying on an aggregate expectation, to a heterogeneous …

There are two opposing views concerning the expectations hypothesis in economics and
finance. According to the traditional, neoclassical view, propagated by Muth (1961) and …

We consider a monetary authority that provides an explicit inflation target in order to align
expectations with the policy objective. However, biased perceptions of the target may arise …