This study extends the hybrid version of the baseline New-Keynesian model with heterogeneous agents who may adopt various forecast heuristics. With a focus on consumer expectations, we identify the most appropriate pairs of forecast heuristics that can lead to an equivalent fit to the data...

In this study, we analyze the macroeconomic dynamics under various shocks in two competing frameworks. Given the baseline New-Keynesian model, we compare the impulse response functions that stem from the hybrid version under rational expectations with the ones obtained in the forward-looking...

The role of confidence indices in explaining consumption growth in Sweden during the period 1975-94 is analyzed in this paper. We first analyzed which variables influence the levels of the confidence indices. Two important such factors are found to be changes in real interest rates and changes...