Imperfect Information and Aggregate Supply
By N. Mankiw, Ricardo Reis, Stacy Carlson, Benjamin M. Friedman, John Leahy, Neil R. Mehrotra. 2010
130 citations recorded by the source corpus.
This paper surveys the research in the past decade on imperfect information models of aggregate supply and the Phillips curve. This new work has emphasized that information is dispersed and disseminates slowly across a population of agents who strategically interact in their use of information. We discuss the foundations on which models of aggregate supply rest, as well as the micro-foundations for two classes of imperfect information models: models with partial information, where agents observe economic conditions with noise, and models with delayed information, where they observe economic conditions with a lag. We derive the implications of these two classes of models for: the existence of a non-vertical aggregate supply, the persistence of the real effects of monetary policy, the difference between idiosyncratic and aggregate shocks, the dynamics of disagreement, and the role of transparency in policy. Finally, we present some of the topics on the research frontier in this area.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/fff53b4f93573651dfddd8004b184b0888b04ec6
Citations in the corpus
- Information Rigidity and the Expectations Formation Process: A Simple Framework and New Facts (2012, unknown): “1 Sticky-Information Model Mankiw and Reis (2002) propose a model of inattentive agents who update their information sets each period with probability 1 but acquire no new information with probability , so that can be interpreted as the degree of information rigidity and 1/ 1 is the average duration”
- Inattentive professional forecasters (2013, unknown): “Veldkamp (2009) and Mankiw & Reis (2010) provide surveys.”
- Empirical Evidence on Inflation Expectations in the New Keynesian Phillips Curve (2014, unknown): “The most common identifying assumption in the literature, which is the one used by Galí and Gertler (1999), is that the cost-push shock u t satisfies E t−1 ( u t ) = 0.”
- Incomplete Information in Macroeconomics: Accommodating Frictions in Coordination (2016, unknown): “For complementary reviews of the literature, see Sims (2010), Mankiw and Reis (2011), and Veldkamp (2011).”