In the last decade, the potential macroeconomic effects of intermittent large adjustments in microeconomic variables such as prices, investment, consumption of durables or employment- a behaviour which may be justified by the presence of kinked adjustment costs- have been studied in models where economic agents continuously observe the optimal level of their decision variable. In this paper, we develop a simple model which introduces infrequent information in a kinked adjustment cost model by assuming that agents do not observe continuously the frictionless optimal level of the control variables.
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Paper provided by Centre interuniversitaire de recherche en économie quantitative, CIREQ in its series Cahiers de recherche with number
9716.
Find related papers by JEL classification: D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
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