Frictions in an Experimental Dynamic Stochastic General Equilibrium Economy
Affiliation
Department of Economics, University of ArizonaIssue Date
2021-02-24
Metadata
Show full item recordPublisher
Wiley BlackwellCitation
Noussair, C. N., Pfajfar, D., & Zsiros, J. (2021). Frictions in an experimental dynamic stochastic general equilibrium economy. Journal of Money, Credit and Banking.Rights
© 2021 The Ohio State University.Collection Information
This item from the UA Faculty Publications collection is made available by the University of Arizona with support from the University of Arizona Libraries. If you have questions, please contact us at repository@u.library.arizona.edu.Abstract
We construct experimental economies, populated with human subjects, with different institutional features that have a structure and incentives similar to a dynamic stochastic general equilibrium model. An experimental economy with monopolistic competition and no menu costs generates empirical patterns that are closer to the U.S. economy than simulations or the other experimental environments. We observe greater welfare and output in a setting where goods are perfect substitutes compared to treatments with monopolistic competition. Discretionary human central bankers produce lower output and welfare compared to an automated instrumental rule. Menu costs reduce inflation volatility. © 2021 The Ohio State UniversityNote
12 month embargo; first published online 24 February 2021ISSN
0022-2879EISSN
1538-4616Version
Final accepted manuscriptae974a485f413a2113503eed53cd6c53
10.1111/jmcb.12791