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Rational inattention

Bartosz Maćkowiak

Research Bulletin, 2011, vol. 12, 12-15

Abstract: In the wake of the financial crisis, the standard rational expectations approach to macroeconomics has been criticised because of its strong assumption that agents are able to process any amount of information quickly and without error. “Rational inattention” is an alternative approach to expectations formation which acknowledges limits to agents’ ability to process information. Models with rational inattention yield new insights concerning business cycles and monetary policy. JEL Classification: E3, E5

Keywords: rational; inattention (search for similar items in EconPapers)
Date: 2011-03
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Citations: View citations in EconPapers (2)

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