Information Frictions among Firms and Households

Sebastian Link, Andreas Peichl, Christopher Roth and Johannes Wohlfart
Additional contact information
Johannes Wohlfart: Department of Economics and CEBI, University of Copenhagen

No 21-07, CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI)

Abstract: We leverage survey data from Germany, Italy, and the US to document several novel stylized facts about the extent of information frictions among firms and households. First, firms’ expectations about the central bank policy rate, inflation, and aggregate unemployment are more aligned with expert forecasts and less dispersed than households’. Second, there is substantially more heterogeneity in information frictions within households than within firms. Third, consistent with firms having stronger priors, they update their policy rate expectations significantly less compared to households when provided with an expert forecast. Our results have important implications for modeling heterogeneity in macroeconomic models.

Keywords: information frictions; firms; households; expectation formation; interest rates (search for similar items in EconPapers)
JEL-codes: D83 D84 E71 (search for similar items in EconPapers)
Pages: 95
Date: 2021-03-24
New Economics Papers: this item is included in nep-cwa and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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https://www.econ.ku.dk/cebi/publikationer/working-papers/CEBI_WP_07-21.pdf (application/pdf)

Related works:
Journal Article: Information frictions among firms and households (2023)
Working Paper: Information Frictions among Firms and Households (2022)
Working Paper: Information Frictions among Firms and Households (2022)
Working Paper: Information Frictions among Firms and Households (2021)
Working Paper: Information Frictions among Firms and Households (2021)
Working Paper: Information Frictions among Firms and Households (2021)
Working Paper: Information Frictions among Firms and Households (2021)
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