Animal Spirits in a Monetary Model

  title={Animal Spirits in a Monetary Model},
  author={Roger E. A. Farmer and Konstantin Platonov},
  journal={Macroeconomics: Aggregative Models eJournal},
The Long-Run Effects of Monetary Policy
Does monetary policy have persistent effects on the productive capacity of the economy? Yes, we find that such effects are economically and statistically significant and last for over a decade based
The importance of beliefs in shaping macroeconomic outcomes
  • R. Farmer
  • Economics
    Oxford Review of Economic Policy
  • 2020
For the past 30 years of the history of macroeconomic thought, the Indeterminacy School of Macroeconomics has used general equilibrium models with indeterminate equilibria to understand the
The Role of Financial Policy
  • R. Farmer
  • Economics
    Review of Keynesian Economics
  • 2018
I review the contribution and influence of Milton Friedman's 1968 presidential address to the American Economic Association. I argue that Friedman's influence on the practice of central banking was
Some International Evidence for Keynesian Economics Without the Phillips Curve
Farmer and Nicolo (2018) show that the Farmer Monetary (FM)- model outperforms the three-equation New-Keynesian (NK)-model in post war U.S. data. In this paper, we compare the marginal data density
Keynesian Economics Without the Phillips Curve
What Bird is That? Central Banking and Monetary Policy in the Last Forty Years
The aim of this paper is to review the historical development of monetary policy theory since the 1980s using as focal point the nexus among central bank governance, central banker preferences and
Monetary Policy, Expectations and Business Cycles in the U.S. Post-War Period
This paper examines the interactions between monetary policy and the formation of expectations to explain U.S. business cycle fluctuations in the post-war period. I estimate a conventional
Monetary Policy, Self-Fulfilling Expectations and the U.S. Business Cycle
I estimate a medium-scale New-Keynesian model and relax the conventional assumption that the central bank adopted an active monetary policy by pursuing inflation and output stability over the entire
Vítor Constâncio: Developing models for policy analysis in central banks
We value research because it contributes to shape the intellectual framework that we use to understand economic developments and to take policy decisions. We are especially keen to keep abreast of
Macroeconomic Implications of Financial Imperfections: A Survey
This paper surveys the theoretical and empirical literature on the macroeconomic implications of financial imperfections. It focuses on two major channels through which financial imperfections can


Animal Spirits, Persistent Unemployment and the Belief Function
This paper presents a theory of the monetary transmission mechanism in a monetary version of Farmer's (2009) model in which there are multiple equilibrium unemployment rates. The model has two
The Monetary Transmission Mechanism
Recent literature on structural vector autoregressions has attempted to identify the effects on the economy of an increase in the stock of money. This work has led to a broad concensus. Initially, an
Two alternative theories of aggregate supply, both with a New Keynesian “flavor,” are compared. The first assumes that prices are rigid due to the existence of menu costs. The second derives price
Confidence, Crashes and Animal Spirits
This paper presents a model of the macroeconomy that reformulates what I take to be two important ideas from Keynes General Theory. The first is that there may be a continuum of steady state
Animal Spirits, Financial Crises and Persistent Unemployment
This paper develops a rational expectations model with multiple equilibrium unemployment rates where the price of capital may be unbounded above. I argue that this property is an important feature of
Expectations, Employment and Prices
Expectations, Employment and Prices brings Keynesian economics into the 21st century by providing a new paradigm that explains how high unemployment could potentially persist forever without a little
Learning and expectations in macroeconomics
A crucial challenge for economists is figuring out how people interpret the world and form expectations that will likely influence their economic activity. Inflation, asset prices, exchange rates,
With the collapse of the Bretton Woods system, any pretense of a connection of the world's currencies to any real commodity has been abandoned. Yet since the 1980s, most central banks have abandoned
Shocks and Frictions in U.S. Business Cycles: A Bayesian DSGE Approach
Using a Bayesian likelihood approach, we estimate a dynamic stochastic general equilibrium model for the US economy using seven macro-economic time series. The model incorporates many types of real
Prosperity for All: How to Prevent Financial Crises
In the aftermath of the 2008 financial crisis, economists around the world have advanced theories to explain the persistence of high unemployment and low growth rates. According to Roger E. A.