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Information Frictions among Firms and Households

Sebastian Link, Andreas Peichl (), Christopher Roth and Johannes Wohlfart

VfS Annual Conference 2021 (Virtual Conference): Climate Economics from Verein für Socialpolitik / German Economic Association

Abstract: We use surveys of German households and firms to study the extent of information frictions among different groups of economic agents. Firms' expectations about the central bank policy rate, inflation, and aggregate unemployment are more aligned with expert forecasts and less dispersed than households'. Moreover, firms update their policy rate expectations significantly less when provided with an expert forecast and do not extrapolate to expected own borrowing rates, while households extrapolate to personal rates. Our results challenge previous findings that information frictions among firms are as large as those among households, which has important implications for modeling heterogeneity in macroeconomic expectation formation.

Keywords: Information frictions; firms; households; expectation formation; interest rates (search for similar items in EconPapers)
JEL-codes: 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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Citations: View citations in EconPapers (9) Track citations by RSS feed

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https://www.econstor.eu/bitstream/10419/242376/1/vfs-2021-pid-49426.pdf (application/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
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