develop a behavioral New Keynesian macroeconomic model, in which we relax the assumption of rational expectations. Agents are … variances to affect the economy. In forming expectations, agents may be subject to shifts in optimism and pessimism (sentiment …

rational households and the expectations formation process are uncertain from the perspective of the central bank, we derive …

demand. The former learning effect, combined with the latter real-options effect, adversely affect firms' entry decisions and …