Monetary Policy, Endogenous Inattention and the Volatility Trade‐off
Bibliographic Data
| ID | 9712496 |
|---|---|
| Authors | William A Branch (0000-0001-5986-6667, University of California, Irvine), John B Carlson (Federal Reserve Bank of Cleveland), John Carlson (Federal Reserve Bank of Cleveland), George W Evans (0000-0003-4104-167X, University of Oregon and St. Andrews), Bruce McGough (Oregon State University) |
| Year | 2009 |
| Volume | 119 |
| Issue | 534 |
| Pages | 123-157 |
| Publication date | 2009-01-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1111/j.1468-0297.2008.02222.x |
| OpenAlex | W3122801864 |
| Language | EN |
| Citations received | 1 |
| References cited | 40 |
This article considers the interaction of optimal monetary policy and agents' beliefs. We assume that agents choose their information acquisition rate by minimising a loss function that depends on expected forecast errors and information costs. "Endogenous inattention" is a Nash equilibrium in the information processing rate. Although a decline of policy activism directly increases output volatility, it indirectly anchors expectations, which decreases output volatility. If the indirect effect dominates then the usual trade-off between output and price volatility breaks down. Copyright © The Author(s). Journal compilation © Royal Economic Society 2009
Econometrics · Economics · Implied volatility · Monetary economics · Monetary policy · Volatility (finance · Global Financial Crisis and Policies · Market Dynamics and Volatility · Monetary Policy and Economic Impact
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Macroeconomic Expectations of Households and Professional Forecasters
Implications of rational inattention
Were There Regime Switches in U.S. Monetary Policy?
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The Optimal Degree of Commitment to an Intermediate Monetary Target
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Technology Shocks in the New Keynesian Model
Have output growth rates stabilised? evidence from the g‐7 economies
Rules Rather than Discretion
Aggregate Dynamics and Staggered Contracts
The E‐Correspondence Principle
The Inexorable and Mysterious Tradeoff Between Inflation and Unemployment
| Unique citing works | 1 |
|---|---|
| Citations per year | 0,09 |
| Citation span | 2015 - 2015 (1) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 1 |