Information rigidity and the expectations formation process
Subtitle: a simple framework and new facts
By: Olivier Coibion, Yuriy Gorodnichenko
Contributors: Gorodnichenko, Yuriy; National Bureau of Economic Research
Series: NBER working paper series -- working paper 16537; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16537.
Publisher: National Bureau of Economic Research
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] :
Description: "We propose a new approach to test of the null of full-information rational expectations which is informative about whether rejections of the null reflect departures from rationality or full-information.  This approach can also quantify the economic significance of departures from the null by mapping them into the underlying degree of information rigidity faced by economic agents.  Applying this approach to both U.S.  and cross-country data of professional forecasters and other economic agents yields pervasive evidence of informational rigidities that can be explained by models of imperfect information.  Furthermore, the proposed approach sheds new light on the implications of policies such as inflation-targeting and those leading to the Great Moderation on expectations.  Finally, we document evidence of state-dependence in the expectations formation process"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 3/24/2011.

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