The macroeconomic effects of infrequent information with adjustment costs

Marco Bonomo and René Garcia

Canadian Journal of Economics, 2001, vol. 34, issue 1, 18-35

Abstract: We extend the macroeconomic literature on -type rules by introducing infrequent information in a kinked adjustment-cost model. We first show that optimal individual decision rules are both state and time dependent. We then develop an aggregation framework to study the macroeconomic implications of such optimal individual decision rules. In our model, a vast number of agents act together, and more so when uncertainty is large. The average effect of an aggregate shock is inversely related to its size and to aggregate uncertainty. These results contrast with those obtained with full information adjustment cost models.

JEL-codes: E0 E1 E2 E3 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: The macroeconomic effects of infrequent information with adjustment costs (2001)
Working Paper: The macroeconomic effects of infrequent information with adjustment costs (2000)
Working Paper: The Macroeconomic Effects of Infrequent Information with Adjustment Costs (1997)
Working Paper: The Macroeconomic Effects of Infrequent Information With Adjustment Costs (1997)
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