Anticipating Future Expected Utility and Coordination Motives for Information Decisions in Networks

Antonio Jimenez-Martinez

No DTE 536, Working Papers from CIDE, División de Economía

Abstract: This paper investigates empirically the relationship between inflation, inflation volatility and output growth in the case of México using monthly data over the period 1993-2011. Specifically a bivariate GARCH-M model is estimated to test the hypotheses that inflation rates are directly related to inflation volatility, and that inflation volatility affects negatively output growth. It is found that higher inflation rates are associated to higher inflation volatility which in turn affects negatively output growth. These results suggest that policies aimed to reduce inflation could have beneficial effects on growth through the specific channel of reducing inflation volatility.

Keywords: Incomplete information; information acquisition; externalities; anticipation of expected utility; communication networks; coordination. (search for similar items in EconPapers)
JEL-codes: C72 D03 D82 D83 D85 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2012-09
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