Ricerc@Sapienza

This article provides a critical review of the foundations of the new Keynesian apparatus, to evaluate the actual strength of the Keynesian inheritance. As a reference of the Keynesian vision, Fausto Vicarelli’s recognition of the Keynesian message is adopted. The critical recognition of the new Keynesian methodology focuses on its analytical foundations, the recent extensions and on the criticality of its empirical performances and controls.

Since the late 1960s, research in the field of general equilibrium theory has focused on economies in which spot markets for commodities coexist with some asset markets and trade takes place sequentially over time. The study of ‘sequential economies’ has developed along two paths inspired by Hicks’s Value and Capital, which stress the dependence of agents’ choices on their expectations of future prices. The first is temporary equilibrium theory, in which expectations are subjective.

Why do people keep their promises? Vanberg (2008) and Ederer and Stremitzer (2017) provide causal evidence in favor of, respectively, an intrinsic preference for keeping one's word and Charness and Dufwenberg's (2006) expectations-based account based on guilt aversion. The overall picture is incomplete though, as no study disentangles effects in a design that provides exogenous variation of both (the key features of) promises and beliefs. We report evidence from an experimental design that does so.