RESOLVING NEW KEYNESIAN ANOMALIES WITH WEALTH IN THE UTILITY FUNCTION

• 成果类型: Article
• 署名作者: Michaillat, Pascal; Saez, Emmanuel
• 署名单位: Brown University; University of California System; University of California Berkeley
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/rest_a_00893
• 发表日期: 2021-05
• 页码: 197-215
• 关键词: time preference; relative wealth; status-seeking; social-status; POLICY; guidance; neuroscience; capitalism; inflation; BEHAVIOR

摘要

At the zero lower bound, the New Keynesian model predicts that output and inflation collapse to implausibly low levels and that government spending and forward guidance have implausibly large effects. To resolve these anomalies, we introduce wealth into the utility function; the justification is that wealth is amarker of social status, and people value status. Since people partly save to accrue social status, the Euler equation is modified. As a result, when the marginal utility of wealth is sufficiently large, the dynamical system representing the zero-lower-bound equilibrium transforms from a saddle to a source, which resolves all the anomalies.