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Sluggish information diffusion and monetary policy shocks


  • Orlando Gomes

    () (ISCAL / Lisbon Politechnique Institute and Business Research Unit / ISCTE-LUI)

  • Vivaldo M. Mendes

    () (Business Research Unit / ISCTE-LUI)


The sticky-information model appeared in order to offer a more empirically consistent view on the effects of monetary policy than the one provided by the benchmark sticky prices setup. Such inattentiveness framework was built on the assumption that current decisions are mainly based on past expectations about the current state of the economy. In this note, we propose an explanation for information stickiness that goes beyond the simple idea of infrequent updating of expectations. The suggestive new feature is that contemporaneous decisions will depend on a process of information diffusion that is triggered by the relation between two rational players: the profit maximizing media industry and the private agents, who seek information in order to update prices.

Suggested Citation

  • Orlando Gomes & Vivaldo M. Mendes, 2011. "Sluggish information diffusion and monetary policy shocks," Economics Bulletin, AccessEcon, vol. 31(2), pages 1275-1287.
  • Handle: RePEc:ebl:ecbull:eb-11-00085

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    Cited by:

    1. Orlando Gomes, 2013. "Spatiotemporal inflation dynamics in response to a monetary policy shock," Economics and Business Letters, Oviedo University Press, vol. 2(2), pages 54-65.

    More about this item


    Information diffusion; Monetary shocks; Sticky information; Inflation trajectories;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles


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