EconPapers    
Economics at your fingertips  
 

Optimal foresight

Ryan Chahrour and Kyle Jurado

Journal of Monetary Economics, 2021, vol. 118, issue C, 245-259

Abstract: Agents have foresight when they receive information about a random process above and beyond the information contained in its current and past history. In this paper, we propose an information-theoretic measure of the quantity of foresight in an information structure, and show how to separate informational assumptions about foresight from physical assumptions about the dynamics of the processes itself. We then develop a theory of endogenous foresight in which the type of foresight is chosen optimally by economic agents. In a prototypical dynamic model of consumption and saving, we derive a closed-form solution to the optimal foresight problem.

Keywords: Expectations; News; Information choice (search for similar items in EconPapers)
JEL-codes: D83 D84 E21 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304393220301203
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Optimal Foresight (2020) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:118:y:2021:i:c:p:245-259

DOI: 10.1016/j.jmoneco.2020.11.001

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-03-29
Handle: RePEc:eee:moneco:v:118:y:2021:i:c:p:245-259