Monetary Policy, Bounded Rationality, and Incomplete Markets

Emmanuel Farhi, Iván Werning

NBER Working Paper No. 23281
Issued in March 2017, Revised in February 2019

---- Acknowledgments ----

We are grateful to Mikel Petri, who provided outstanding research assistance. For useful comments we thank Xavier Gabaix, Jordi Gali, Mark Gertler, Luigi Iovino, Benoit Mojon, Martin Schneider, Andrei Shleifer, Gianluca Violante, Mirko Wiederholt, and Michael Woodford. We also thank participants at the NYU/Banque de France/PSE conference on Monetary Policy in Models with Heterogeneous Agents, the NBER Behavioral Macroeconomics Summer Institute, and the ECB Annual Research Conference. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

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