‘Home bias’ in expectations heightens shocks – paper

netherlands-bank-2
The Netherlands Bank

A working paper published by the Netherlands Bank presents a model for a two-country monetary union in which agents’ expectations are “largely based on domestic variables, and less so on foreign variables”.

In Home biased expectations and macroeconomic imbalances in a monetary union, Dennis Bonam and Gavin Goy use the model to examine the effects of an asymmetric shock would be on the monetary union.

This home bias in expectations, the authors say, strengthens the real interest rate channel

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: