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Attentiveness cycles: Synchronized behavior and aggregate fluctuations

Listed author(s):
  • Gomes, Orlando

A sticky-information macroeconomic model is developed in order to analyze the behavior of the time trajectories of the inflation rate and of the output gap, when disturbed by eventual monetary policy shocks. In opposition to what is typical in the literature on this subject, di¤erent paces on information updating explicitly lead to a setting with interaction among heterogeneous agents. Speci.cally, we consider firms with di¤erent information updating frequencies whose behavior implies the emergence of attentiveness cycles of possibly large lengths; within these cycles we deduct a di¤erently shaped Phillips curve for each time period. The developed scenario and the accomplished results, which involve long-term endogenous .uctuations triggered by simple policy rules, allow to classify the proposed framework as a complexity view on macroeconomics.

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File URL: http://bibliotecadigital.fgv.br/ojs/index.php/rbe/article/view/3720
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Article provided by FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil) in its journal Revista Brasileira de Economia.

Volume (Year): 66 (2012)
Issue (Month): 3 (October)
Pages:

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Handle: RePEc:fgv:epgrbe:v:66:y:2012:i:3:a:3720
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  1. Brock, William A. & Hommes, Cars H., 1998. "Heterogeneous beliefs and routes to chaos in a simple asset pricing model," Journal of Economic Dynamics and Control, Elsevier, vol. 22(8-9), pages 1235-1274, August.
  2. Orlando Gomes, . "Volatility, Heterogeneous Agents and Chaos," The Electronic Journal of Evolutionary Modeling and Economic Dynamics, IFReDE - Université Montesquieu Bordeaux IV.
  3. Hommes, C.H., 2007. "Complexity, Evolution and Learning: a simple story of heterogeneous expectations and some empirical and experimental validation," CeNDEF Working Papers 07-07, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  4. N. Gregory Mankiw & Ricardo Reis, 2002. "Sticky Information versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1295-1328.
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  9. Jean-Philippe Bouchaud, 2008. "Economics need a scientific revolution," Papers 0810.5306, arXiv.org.
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