Bibliographic Details

Behavioural macroeconomics : theory and policy / Paul de Grauwe and Yuemei Ji.

Author / Creator Grauwe, Paul de, author.
Edition First edition.
Imprint Oxford ; New York, NY : Oxford University Press, 2019.
Description xi, 260 pages : illustrations ; 26 cm
Language English
Subject Economics -- Psychological aspects.
Macroeconomics -- Psychological aspects.
Macroeconomics -- Methodology.
Macroeconomics -- Methodology.
Verhaltenssteuerung
Wirtschaftliches Verhalten
Makroökonomie
Format Print, Book
URL for this record http://pi.lib.uchicago.edu/1001/cat/bib/11986463
Other authors / contributors Ji, Yuemei, author.
ISBN 019883232X
9780198832324
9780192568366
Notes Includes bibliographical references and index.
Summary Modern macroeconomics has been based on the paradigm of the rational individual capable of understanding the complexity of the world. This has created a very shallow theory of the business cycle in which nothing happens in the macroeconomy unless shocks occur from outside. Behavioural Macroeconomics: Theory and Policy uses a different paradigm. It assumes that individual agents experience cognitive limitations preventing them from having rational expectations. Instead these individuals use simple rules of behaviour. 0Behavioural Macroeconomics introduces rationality by allowing individuals to learn from their mistakes and to switch to the rules that perform better. It introduces the idea of endogenously generated "animals spirits" that drive the business cycle and are in turn influenced by it, and applies this model to shed new light on a number of important issues. It analyses the role of fiscal policy in stabilizing the economy while maintaining debt sustainability; expands the model to include a banking sector and show how banks amplify the booms and busts; and explains how animal spirits help to synchronize the business cycles across countries. 0The model set out in Behavioural Macroeconomics leads to very different policy implications from the mainstream macroeconomic model. It shows how policymakers have a responsibility to stabilize an otherwise unstable system.

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