Attentiveness cycles: Synchronized behavior and aggregate fluctuations

Orlando Gomes

Revista Brasileira de Economia - RBE, 2012, vol. 66, issue 3

Abstract: A sticky-information macroeconomic model is developed in order to analyze the behavior of the time trajectories of the inflation rate and of the output gap, when disturbed by eventual monetary policy shocks. In opposition to what is typical in the literature on this subject, di¤erent paces on information updating explicitly lead to a setting with interaction among heterogeneous agents. Speci.cally, we consider firms with di¤erent information updating frequencies whose behavior implies the emergence of attentiveness cycles of possibly large lengths; within these cycles we deduct a di¤erently shaped Phillips curve for each time period. The developed scenario and the accomplished results, which involve long-term endogenous .uctuations triggered by simple policy rules, allow to classify the proposed framework as a complexity view on macroeconomics.

Date: 2012
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