What does this research mean for the field?

The empirical evidence for cognitive discounting in New Keynesian models is highly sensitive to the modeling of expectations, with Euler-equation learning allowing models to fit macroeconomic data using only minimal degrees of myopia compared to rational expectations. Novelty: ClaimNovelty.INCREMENTAL. Consensus alignment: ConsensusAlignment.NEUTRAL.

What question did this study set out to answer?

To evaluate how different expectation-formation mechanisms—rational expectations, infinite-horizon learning, and Euler-equation learning—affect the estimated degree of cognitive discounting in a behavioral New Keynesian model.

September 14, 2026Journal of money credit and banking

Behavioral New Keynesian Models: Learning versus Cognitive Discounting

View Full Paper

Ask AI

Bookmark

Authors

GMGreta Meggiorini FMFabio Milani

Discussion

Member takes

Overview

Macroeconomic modeling reveals that Euler-equation learning minimizes required cognitive discounting in economic agents, suggesting expectation formation drives perceived myopia.

Key Points

To evaluate how different expectation-formation mechanisms—rational expectations, infinite-horizon learning, and Euler-equation learning—affect the estimated degree of cognitive discounting in a behavioral New Keynesian model.
Formulated and estimated a behavioral New Keynesian model incorporating cognitive discounting (myopia).
Tested the framework across three expectational settings: rational expectations, subjective expectations with infinite-horizon learning, and subjective expectations with Euler-equation learning.
Rational expectations required unrealistically large degrees of cognitive discounting to fit macroeconomic data.
Infinite-horizon learning similarly necessitated high levels of myopia because modeled agents remained predominantly far-sighted.
Euler-equation learning successfully matched empirical data with only minimal estimated cognitive discounting.

Cite This Study

Meggiorini et al. (2026) studied this question.

synapsesocial.com/papers/6aa7b2e10926e14a848b1644 https://doi.org/10.1111/jmcb.70086

View Full Paper

Ask AI

Bookmark

September 14, 2026Journal of money credit and banking

Behavioral New Keynesian Models: Learning versus Cognitive Discounting

View Full Paper

Ask AI

Bookmark

Authors

GMGreta Meggiorini FMFabio Milani

Discussion

Member takes

Overview

Macroeconomic modeling reveals that Euler-equation learning minimizes required cognitive discounting in economic agents, suggesting expectation formation drives perceived myopia.

Key Points

To evaluate how different expectation-formation mechanisms—rational expectations, infinite-horizon learning, and Euler-equation learning—affect the estimated degree of cognitive discounting in a behavioral New Keynesian model.
Formulated and estimated a behavioral New Keynesian model incorporating cognitive discounting (myopia).
Tested the framework across three expectational settings: rational expectations, subjective expectations with infinite-horizon learning, and subjective expectations with Euler-equation learning.
Rational expectations required unrealistically large degrees of cognitive discounting to fit macroeconomic data.
Infinite-horizon learning similarly necessitated high levels of myopia because modeled agents remained predominantly far-sighted.
Euler-equation learning successfully matched empirical data with only minimal estimated cognitive discounting.

Cite This Study

Meggiorini et al. (2026) studied this question.

synapsesocial.com/papers/6aa7b2e10926e14a848b1644 https://doi.org/10.1111/jmcb.70086

Also Consider

Synapse has enriched 3 closely related papers on similar clinical questions. Consider them for comparative context:

View Full Paper

Ask AI

Bookmark