Behavioral economics and DSGE-modeling

Abstract

The article considers the “behavioral” modification of the standard DSGE model proposed by X. Gabaix. In his model, agents behave in a boundedly rational manner, showing incomplete attention to macroeconomic statistics. Moreover, unlike other attempts to abandon the hypothesis of rational expectations in favor of a model of adaptive and/or static expectations, the Gabaix model is initially constructed taking into account the inattention of economic agents to macro variables. The consequence of bounded rationality is that monetary policy is less effective (compared to the model of rational expectations) and, conversely, fiscal policy is effective due to the fact that Ricardo equivalence is not fulfilled. If the inertia of inflation expectations is taken into account in the Gabaix model, it demonstrates that the interest rate has a positive effect on inflation in the long run. Bayesian estimates for the rationality coefficient in the Russian economy are presented. Moreover, attention to inflation is much lower than attention to the variable of economic activity.