Peter Howitt is best known for his contributions to growth theory, but his work in short- run economics, which began with his Ph.D thesis and still continues, is important and deserves attention. It lies firmly in the Keynesian macro-disequilibrium tradition of Clower and Leijonhufvud, and for a...

Peter Howitt is best known for his contributions to growth theory, but his work in short- run economics, which began with his Ph.D thesis and still continues, is important and deserves attention. It lies firmly in the Keynesian macro-disequilibrium tradition of Clower and Leijonhufvud, and for a...

This paper examines Robert E. Lucas's views on the relationship of macroeconomics to real world economic phenomena, and on Keynes's place in its history, suggesting that these stem from a particular and debatable understanding of how the subdiscipline has evolved. It considers some implications...

In this paper we empirically examine a heterogeneous bounded rationality version of a hybrid New-Keynesian model. The model is estimated via the simulated method of moments using Euro Area data from 1975Q1 to 2009Q4. It is generally assumed that agents' beliefs display waves of optimism and...

We examine the role of expectations in the Great Moderation episode. We derive theoretical restrictions in a New-Keynesian model and test them using measures of expectations obtained from survey data, the Greenbook and bond markets. Expectations explain the dynamics of inflation and of interest...

The goal of this paper is to show how adding behavioral components to micro-foundated models of macroeconomics may contribute to a better understanding of real world phenomena. The authors introduce the reader to variations of the Keynesian Beauty Contest (Keynes, The General Theory of...

With our book Saving and Investment in the Twenty-First Century: The Great Divergence (published as open access), we present a comprehensive theoretical explanation as well as empirical evidence for the phenomenon of low interest rates observed in the OECD countries and China and make various...