@techreport{NBERw16522,
 title = "Animal Spirits, Persistent Unemployment and the Belief Function",
 author = "Roger E.A. Farmer",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "16522",
 year = "2010",
 month = "November",
 URL = "http://www.nber.org/papers/w16522",
 abstract = {This paper presents a theory of the monetary transmission mechanism in a monetary version of Farmer’s (2009) model in which there are multiple equilibrium unemployment rates. The model has two equations in common with the new-Keynesian model; the optimizing IS curve and the policy rule. It differs from the new-Keynesian model by replacing the Phillips curve with a belief function to determine expectations of nominal income growth. I estimate both models using U.S. data and I show that the Farmer monetary model fits the data better than its new-Keynesian competitor.},
}