Arbeitspapier

Why don't people pay attention? Endogenous sticky information in a DSGE Model

Building on the models of sticky information, we endogenize the probability of obtaining new information by introducing a switching mechanism allowing agents to choose between costly rational expectations and costless expectations under sticky information. Thereby, the share of agents with rational expectations becomes endogenous and timevarying. While central results of sticky information models are retained, we find that the share of rational expectations is positively correlated with the variance of the variable forecasted, providing a link to models of near-rationality. Output expectations in our model are generally more rational than inflation expectations, but the share of rational inflation expectations increases with a rising variance of the interest rate. With regard to optimal monetary policy, we find that the Taylor principle provides a necessary and sufficient condition for the determinacy of the model. However, output and inflation stability are optimized if the central bank does not react too strongly to inflation, but rather also targets the output gap with a relatively large coefficient in the Taylor rule.

Sprache
Englisch

Erschienen in
Series: KOF Working Papers ; No. 260

Klassifikation
Wirtschaft
Price Level; Inflation; Deflation
Monetary Policy
Policy Objectives; Policy Designs and Consistency; Policy Coordination
Thema
Endogenous sticky information
heterogeneous expectations
DSGE models
Informationsverbreitung
Rationales Verhalten
Dynamisches Gleichgewicht
Agent-based Model
Theorie

Ereignis
Geistige Schöpfung
(wer)
Dräger, Lena
Ereignis
Veröffentlichung
(wer)
ETH Zurich, KOF Swiss Economic Institute
(wo)
Zurich
(wann)
2010

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Dräger, Lena
  • ETH Zurich, KOF Swiss Economic Institute

Entstanden

  • 2010

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