Optimal Price Setting With Observation and Menu Costs
TLDR
In this paper, the authors study the price setting problem of a firm in the presence of both observation and menu costs and study how the firm's choices map into several observable statistics, depending on the level and relative magnitude of the observation vs the menu cost.Citations
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Inattentive professional forecasters
TL;DR: This paper used the ECB Survey of Professional Forecasters to characterize expectations at the micro-level, and found that forecasters fail to systematically update their forecasts and disagree even when updating, which is qualitatively supportive of recent models of inattention.
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Inflation Targeting Does Not Anchor Inflation Expectations: Evidence from Firms in New Zealand
TL;DR: This article found that despite 25 years of inflation targeting by the Reserve Bank of New Zealand, firm managers display little anchoring of such expectations, and their forecasts of future inflation reflect high levels of uncertainty and are extremely dispersed.
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Durable consumption and asset management with transaction and observation costs
TL;DR: In this paper, the focus of rational inattention is shifted from non-durable consumption to durable consumption, and a new model is introduced to quantify the information and transactions costs that are consistent with observed patterns of information review and asset trades.
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The Macroeconomics of Trend Inflation
Guido Ascari,Argia M. Sbordone +1 more
TL;DR: In this paper, the authors show that the conduct of monetary policy should be analyzed by appropriately accounting for the positive trend inflation targeted by policymakers and offer a note of caution regarding recent proposals to address the existing zero lower bound problem by raising the long-run inflation target.
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Rationally Inattentive Seller: Sales and Discrete Pricing
TL;DR: In this paper, the authors show that price rigidity can alternatively reflect optimal price setting when there are no adjustment costs, namely, if the seller is rationally inattentive.
References
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Book
Brownian Motion and Stochastic Calculus
TL;DR: In this paper, the authors present a characterization of continuous local martingales with respect to Brownian motion in terms of Markov properties, including the strong Markov property, and a generalized version of the Ito rule.
Journal ArticleDOI
Expectations and the neutrality of money
TL;DR: In this article, the authors provide a simple example of an economy in which equilibrium prices and quantities exhibit what may be the central feature of the modern business cycle: a systematic relation between the rate of change in nominal prices and the level of real output.
Book
Recursive methods in economic dynamics
TL;DR: In this article, a deterministic model of optimal growth is proposed, and a stochastic model is proposed for optimal growth with linear utility and linear systems and linear approximations.
Posted Content
Monetary Policy Shocks: What Have We Learned and to What End?
TL;DR: The authors reviewed recent research that grapples with the question: What happens after an exogenous shock to monetary policy? They argue that this question is interesting because it lies at the center of a particular approach to assessing the empirical plausibility of structural economic models that can be used to think about systematic changes in monetary policy institutions and rules.
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Sticky Information versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve
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