Behavioral Macro and Complexity

About

This course provides a state of the art overview of complex economic systems with boundedly rational heterogeneous agents. The leading paradigm in macroeconomics assumes that economic agents (households, firms, investors) are perfectly rational in making their decisions. Experimental and empirical evidence indicate that this assumption is too demanding. A central question in the course will be: which emerging macro behavior arises through the interactions of micro decisions of boundedly rational heterogeneous agents and how can policy affect micro and macro behavior.

Topics:
Animal spirits and boom and bust cycles
Bounded rationality and adaptive learning
Complex dynamics, tipping points, chaos and bifurcations
Heterogeneous expectations in asset pricing and macroeconomic models
Macro laboratory experiments
Monetary policy and asset prices under bounded rationality

Literature:
C.H. Hommes (2013). Behavioral Rationality and Heterogeneous Expectations in Complex Economic Systems, Cambridge University Press.
C.H. Hommes (2021), Behavioral & experimental macroeconomics and policy analysis: a complex systems approach, Journal of Economic Literature.

Course leader

Cars Hommes obtained his PhD in Mathematical Economics from the University of Groningen and is professor of Economic Dynamics at the University of Amsterdam. Hommes is one of the pioneers in Behavioural & Experimental Macroeconomics.

Target group

Level
The summer course welcomes (research) master students, PhD students and post-docs with a quantitative background and who are interested in learning state-of-the art complex systems and behavioral macroeconomic modeling. We also welcome professionals from policy institutions such as central banks or international firms and institutions.

Admission requirements
Some background in quantitative studies (mathematics, statistics, econometrics, engineering, etc.) and knowledge of dynamical systems is useful (at the level of a first year course in a Master study), but no formal background will be required.

Fee info