Rule-of-thumb consumers

Rule-of-thumb consumers introduced into the DSGE model will generate a positive impulse response of consumption by government spending shocks, which is observed in data. Deep habits work in the same manner.

This is interesting. More work needed on endogenizing the ratio of nonoptimizing consumers in response to output or whatever else.....

Not an easy project. What will be the correct specification of the budget constraint of the consumer when they switch between two types? ....only known to me are value function approaches.