Abstract
Purpose – The authors introduce non-Ricardian (“ hand-to-mouth” ) myopic agents into an otherwise standard real-business-cycle (RBC) setup augmented with a detailed government sector. The authors investigate the quantitative importance of the presence of nonoptimizing households for cyclical fluctuations in Bulgaria. Design/methodology/approach – The authors calibrate the RBC model to Bulgarian data for the period following the introduction of the currency board arrangement (1999–2018). Findings – The authors find that the inclusion of such non-Ricardian households improves model performance along several dimensions and generally provides a better match vis-a-vis data, as compared to the standard model populated with Ricardian agents only. Originality/value – This is a novel finding in the macroeconomic studies on Bulgaria using modern quantitative methods.
Keywords
Business cycles, Non-Ricardian households, Hand-to-mouth, Myopic behavior, Bulgaria
Publisher
Kinh Tế Quốc Dân???dc.relation.reference???
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Baxter, M. and King, R. (1993), “Fiscal policy in general equilibrium”, American Economic Review, Vol. 83, pp. 315-334. Bulgarian National Bank (2019), “Bulgarian National Bank statistics”, available at: www.bnb.bg (accessed 21 July 2019). Campbell, J. and Mankiw, N. (1989), Consumption, Income and Interest Rates: Reinterpreting the Time Series Evidence, NBER Macroeconomics Annual, The MIT Press, Cambridge, Mass. Canova, F. (2007), Methods for Applied Macroeconomic Research, Princeton University Press, Princeton, NJ. Coenen, G. and Straub, R. (2005), “Non-Ricardian households and fiscal pol...See More
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