Persistence of shocks in an experimental macroeconomy

C.N. Noussair, D. Pfajfar, J. Zsiros

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

Abstract

We design experimental economies based on a New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model. We apply shocks to tastes, productivity, and interest rate policy, and measure the persistence of these shocks. We find that, in a setting where goods are perfect substitutes, there is little persistence of output shocks compared to treatments with monopolistic competition, which perform similarly irrespective of whether or not menu costs are present. Discretionary central banking is associated with greater persistence than automated instrumental rules.
Original languageEnglish
Title of host publicationExperiments in Macroeconomics
EditorsJ. Duffy
PublisherEmerald Group Publishing Ltd.
Pages71-108
Volume17
ISBN (Print)9781784411954
Publication statusPublished - 14 Nov 2014

Publication series

NameResearch in Experimental Economics
Volume17
ISSN (Print)978178441

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