A Sticky-Dispersed Information Phillips Curve: a model with partial and delayed information

Marta Areosa, Waldyr Areosa and Vinicius Carrasco

No 276, Working Papers Series from Central Bank of Brazil, Research Department

Abstract: We study the interaction between dispersed and sticky information by assuming that firms receive private noisy signals about the state in an otherwise standard model of price setting with sticky-information. We compute the unique equilibrium of the game induced by the firms' pricing decisions and derive the resulting Phillips curve. The main effect of dispersion is to magnify the immediate impact of a given shock when the degree of stickiness is small. Its effect on persistence is minor: even when information is largely dispersed, a substantial amount of informational stickiness is needed to generate persistence in aggregate prices and inflation.

Date: 2012-04
New Economics Papers: this item is included in nep-cta and nep-mac
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Related works:
Journal Article: A STICKY–DISPERSED INFORMATION PHILLIPS CURVE: A MODEL WITH PARTIAL AND DELAYED INFORMATION (2020)
Working Paper: A Sticky-Dispersed Information Phillips Curve: A model with partial and delayed information (2010)
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