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Macroeconomic Dynamics under Rational Inattention

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Author Info
Bartosz Mackowiak (Humboldt University Berlin)
Mirko Wiederholt (Humboldt University Berlin)

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Abstract

This paper develops a general equilibrium model with Dixit-Stiglitz preferences, monopolistic competition and rational inattention on the side of both households and firms. We show how to solve a general equilibrium model with rational inattention. We use the model to study how rational inattention affects the impulse responses of macroeconomic variables to monetary policy shocks and technology shocks.

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File URL: http://repec.org/sce2006/up.27121.1141161429.pdf
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Publisher Info
Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 2006 with number 443.

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Date of creation: 04 Jul 2006
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Handle: RePEc:sce:scecfa:443

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