Elasticity of attention and optimal monetary policy

Shaowen Luo and Kwok Ping Tsang

Economics Letters, 2020, vol. 194, issue C

Abstract: Optimal monetary policy depends on whether agents have exogenous, endogenous–inelastic, or endogenous–elastic attention. Under elastic attention, optimal monetary policy induces equilibria that are not possible under the other two settings: no attention to any shocks that generate inefficient economic fluctuations.

Keywords: Rational inattention; Elasticity of attention; Optimal monetary policy (search for similar items in EconPapers)
JEL-codes: D8 E3 E5 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:194:y:2020:i:c:s0165176520302469

DOI: 10.1016/j.econlet.2020.109393

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