Intersectoral Linkages, Diverse Information, and Aggregate Dynamics

Manoj Atolia () and Ryan Chahrour

Review of Economic Dynamics, 2020, vol. 36, 270-292

Abstract: What are the aggregate consequences of information frictions? We address this question in a multi-sector real business cycle model in which firms learn from market-based information. Theoretically, we present two distinct cases in which the aggregate effects of incomplete information completely disappear: either (i) market-based information reveals sector-level optimal actions, or (ii) market-based information reveals aggregate conditions in the economy. When the model is calibrated to United States' sectoral data, both conditions hold almost exactly and incomplete information has a negligible effect on aggregate dynamics. (Copyright: Elsevier)

Keywords: Imperfect information; Information frictions; Dispersed information; Sectoral linkages; Strategic complementarity; Higher-order expectations (search for similar items in EconPapers)
JEL-codes: D52 D57 D80 E32 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://dx.doi.org/10.1016/j.red.2019.10.003
Access to full texts is restricted to ScienceDirect subscribers and institutional members. See https://www.sciencedirect.com/ for details.

Related works:
Software Item: Code and data files for "Intersectoral Linkages, Diverse Information, and Aggregate Dynamics" (2019)
Working Paper: Online Appendix to "Intersectoral Linkages, Diverse Information, and Aggregate Dynamics" (2019)
Working Paper: Intersectoral Linkages, Diverse Information, and Aggregate Dynamics (2015)
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:red:issued:18-248

Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/

DOI: 10.1016/j.red.2019.10.003

Access Statistics for this article

Review of Economic Dynamics is currently edited by Loukas Karabarbounis

More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().