Information Frictions among Firms and Households

Konferenzbeitrag

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.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2021: Climate Economics

Classification and Topics

• Classification: Wirtschaft ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Expectations; Speculations ; Macro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy‡
• Subject: Information frictions ; firms ; households ; expectation formation ; interest rates

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Link, Sebastian ; Peichl, Andreas ; Roth, Christopher ; Wohlfart, Johannes
• Event: Veröffentlichung
• (who): ZBW - Leibniz Information Centre for Economics
• (where): Kiel, Hamburg
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/242376