Efficiency and Policy with Endogenous Learning

Luigi Iovino, Jennifer La'O and George-Marios Angeletos

No 229, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: This paper studies how the endogeneity of information affects the efficiency of the business cycle and the nature of optimal policy. The business cycle is found to be excessively noisy. Optimal taxes and optimal monetary policy are shown to be countercyclical. Such policies incentivize agents to make their choices more sensitive to their idiosyncratic sources of information, which in turn improves the informativeness of market signals and macro statistics.

Date: 2016
New Economics Papers: this item is included in nep-dge and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:229

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