Collard, Fabrice; Fève, Patrick; Guay, Alain - 2024
This paper studies the impact of Higher Order Belief (HOB) shocks, representing shifts in agents' beliefs about others …' beliefs, on macroeconomic outcomes. The dynamic causal effects of these shocks are identified by leveraging a combination of a … proxy-VAR approach and DSGE-based instruments. Our findings suggest that HOB shocks are indeed a key driver of the business …