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Fève, Patrick
, Collard, Fabrice and Guay, Alain
(2024)
Believe it or not, it’s all about Beliefs !
TSE Working Paper, n. 24-1539, Toulouse
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Abstract
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 cycle and account for a sizeable share of the observed business cycle volatility. Finally, our identification approach ensures that these shocks are not confounded with other structural/fundamental shocks.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Language: | English |
| Date: | May 2024 |
| Place of Publication: | Toulouse |
| Uncontrolled Keywords: | Higher Order Beliefs, Business cycles, proxy-VAR, DSGE |
| JEL Classification: | C32 - Time-Series Models E32 - Business Fluctuations; Cycles |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Institution: | Université Toulouse Capitole |
| Site: | UT1 |
| Date Deposited: | 31 May 2024 08:37 |
| Last Modified: | 15 Nov 2024 10:00 |
| OAI Identifier: | oai:tse-fr.eu:129351 |
| URI: | https://publications.ut-capitole.fr/id/eprint/49439 |
