Information rigidities and asymmetric business cycles

Anton Cheremukhin and Antonella Tutino

Journal of Economic Dynamics and Control, 2016, vol. 73, issue C, 142-158

Abstract: We study the link between asymmetries of markups and firm exit rates and asymmetries in information acquisition along the U.S. business cycle. We argue that a model of optimal firm exit under rational inattention produces lagged, counter-cyclical and positively skewed markups together with counter-cyclical exit rates, consistent with the empirical evidence. Our model also predicts counter-cyclical information rigidities consistent with survey evidence.

Keywords: Information; Markups; Exit rates; Rational inattention (search for similar items in EconPapers)
JEL-codes: C63 D21 D22 D80 E32 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:73:y:2016:i:c:p:142-158

DOI: 10.1016/j.jedc.2016.09.013

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