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Information Frictions among Firms and Households

Sebastian Link, Andreas Peichl, Christopher Roth and Johannes Wohlfart
Additional contact information
Andreas Peichl: LMU Munich, ifo Institute
Christopher Roth: University of Warwick, briq, CESifo, Cage Warwick, CEPR
Johannes Wohlfart: CEBI, University of Copenhagen, CESifo, Danish Finance Institute

CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE)

Abstract: We leverage survey data from Germany, Italy, and the US to document several novel stylized facts about the extent of information frictions among firms and households. First, firms’ expectations about the central bank policy rate, inflation, and aggregate unemployment are more aligned with expert forecasts and less dispersed than households’. Second, there is substantially more heterogeneity in information frictions within households than within firms. Third, consistent with firms having stronger priors, they update their policy rate expectations significantly less compared to households when provided with an expert forecast. Our results have important implications for modeling heterogeneity in macroeconomic models.

Keywords: Information frictions; firms; households; expectation formation; interest rates. JEL Classification: D83; D84; E71 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-mac
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https://warwick.ac.uk/fac/soc/economics/research/c ... tions/wp556.2021.pdf

Related works:
Working Paper: Information Frictions among Firms and Households (2022) Downloads
Working Paper: Information Frictions among Firms and Households (2022) Downloads
Working Paper: Information Frictions among Firms and Households (2021) Downloads
Working Paper: Information Frictions among Firms and Households (2021) Downloads
Working Paper: Information Frictions among Firms and Households (2021) Downloads
Working Paper: Information Frictions among Firms and Households (2021) Downloads
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