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Information (in) Chains: information transmission through production chains

  • Waldyr Areosa
  • Marta Areosa

We study the transmission of information in a model with a vertical input-output structure and dispersed information. Firms observe input prices with noise that endogenize the precision of information that is public within a stage but not across stages. In contrast to the case with an exogenous and overall public signal, our main result is that agents may find it optimal to rely less on public information along the chain. A direct implication is that, while information precision remains unchanged with exogenous public signals (information chains), it may decrease along the chain when semi-public signals are endogenous (information in chains).

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File URL: http://www.bcb.gov.br/pec/wps/ingl/wps286.pdf
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Paper provided by Central Bank of Brazil, Research Department in its series Working Papers Series with number 286.

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Date of creation: Jul 2012
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Handle: RePEc:bcb:wpaper:286
Contact details of provider: Web page: http://www.bcb.gov.br/?english

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  1. José Renato Haas Ornelas & José Santiago Fajardo Barbachan & Aquiles Rocha de Farias, 2012. "Estimating Relative Risk Aversion, Risk-Neutral and Real-World Densities using Brazilian Real Currency Options," Working Papers Series 269, Central Bank of Brazil, Research Department.
  2. Aleh Tsyvinski & Arijit Mukherji & Christian Hellwig, 2006. "Self-Fulfilling Currency Crises: The Role of Interest Rates," American Economic Review, American Economic Association, vol. 96(5), pages 1769-1787, December.
  3. Lycia M. G. Araujo & Guilherme M. R. Gomes & Solange M. Guerra & Benjamin M. Tabak, 2011. "Comparação da Eficiência de Custo para BRICs e América Latina," Working Papers Series 252, Central Bank of Brazil, Research Department.
  4. Marta Areosa & Waldyr Areosa & Vinicius Carrasco, 2012. "A Sticky-Dispersed Information Phillips Curve: a model with partial and delayed information," Working Papers Series 276, Central Bank of Brazil, Research Department.
  5. Benjamin M. Tabak & Rogério B. Miranda & Dimas M. Fazio, 2012. "A Geographically Weighted Approach in Measuring Efficiency in Panel Data: the Case of US Saving Banks," Working Papers Series 275, Central Bank of Brazil, Research Department.
  6. Benjamin M. Tabak & Dimas M. Fazio & Daniel O. Cajueiro, 2011. "The Relationship Between Banking Market Competition and Risk-taking: Do Size and Capitalization Matter?," Working Papers Series 261, Central Bank of Brazil, Research Department.
  7. Marta Areosa & Waldyr Areosa, 2012. "Asset Prices and Monetary Policy – A sticky-dispersed information model," Working Papers Series 285, Central Bank of Brazil, Research Department.
  8. Pierre-Richard Agénor & Luiz A. Pereira da Silva, 2011. "Macroprudential Regulation and the Monetary Transmission Mechanism," Working Papers Series 254, Central Bank of Brazil, Research Department.
  9. Pierre-Richard Agénor & K. Alper & L. Pereira da Silva, 2012. "Sudden Floods, Prudential Regulation and Stability in an Open Economy," Working Papers Series 267, Central Bank of Brazil, Research Department.
  10. Arnildo da Silva Correa & Jaqueline Terra Moura Marins & Myrian Beatriz Eiras das Neves & Antonio Carlos Magalhães da Silva, 2011. "Credit Default and Business Cycles: an empirical investigation of Brazilian retail loans," Working Papers Series 260, Central Bank of Brazil, Research Department.
  11. N. Gregory Mankiw & Ricardo Reis, 2010. "Imperfect Information and Aggregate Supply," NBER Working Papers 15773, National Bureau of Economic Research, Inc.
  12. Waldyr Areosa & Marta Areosa, 2012. "The Signaling Effect of Exchange Rates: pass-through under dispersed information," Working Papers Series 282, Central Bank of Brazil, Research Department.
  13. Sergio A. Lago Alves, 2012. "Trend Inflation and the Unemployment Volatility Puzzle," Working Papers Series 277, Central Bank of Brazil, Research Department.
  14. Leonardo S. Alencar, 2011. "Um Exame sobre como os Bancos Ajustam seu Índice de Basileia no Brasil," Working Papers Series 251, Central Bank of Brazil, Research Department.
  15. Eduardo Luis Lundberg, 2011. "Bancos Oficiais e Crédito Direcionado – o que diferencia o mercado de crédito brasileiro?," Working Papers Series 258, Central Bank of Brazil, Research Department.
  16. George-Marios Angeletos & Alessandro Pavan, 2007. "Efficient Use of Information and Social Value of Information," Econometrica, Econometric Society, vol. 75(4), pages 1103-1142, 07.
  17. Fabia A. de Carvalho, 2012. "Uma Breve Análise de Medidas Alternativas à Mediana na Pesquisa de Expectativas de Inflação do Banco Central do Brasil," Working Papers Series 264, Central Bank of Brazil, Research Department.
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