The macroeconomic effects of infrequent information with adjustment costs

Marco Bonomo and René Garcia

No 384, FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) from EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil)

Abstract: We extend the macroeconomic literature on Sstype rules by introducing infrequent information in a kinked ad justment cost model. We first show that optimal individual decision rules are both state-and -time dependent. We then develop an aggregation framework to study the macroeconomic implications of such optimal individual decision rules. In our model, a vast number of agents act together, and more so when uncertainty is large.The average effect of an aggregate shock is inversely related to its size and to aggregate uncertainty. These results are in contrast with those obtained with full information ad justment cost models.

Date: 2000-05-01
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Related works:
Journal Article: The macroeconomic effects of infrequent information with adjustment costs (2001)
Journal Article: The macroeconomic effects of infrequent information with adjustment costs (2001)
Working Paper: The Macroeconomic Effects of Infrequent Information with Adjustment Costs (1997)
Working Paper: The Macroeconomic Effects of Infrequent Information With Adjustment Costs (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:fgv:epgewp:384

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