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Business cycle fluctuations and monetary policy under heterogeneous information

Author

Listed:
  • Romain Baeriswyl

    (Swiss National Bank, Boersenstrasse 15, 8001 Zurich, Switzerland)

  • Pierrick Clerc

    (HEC Liège, Rue Louvrex 14, 4000 Liège, Belgien)

  • Camille Cornand

    (CNRS, Université Lumière Lyon 2, Université Jean Monnet Saint-Etienne, emlyon business school, GATE, 69007, Lyon, France)

Abstract

Modelling business cycle fluctuations and the non-neutrality of money is an ongoing challenge for macroeconomists. While the imperfect-information hypothesis developed by Phelps and Lucas in the 1970s had been abandoned in favour of the sticky-price hypothesis, a recent trend in the literature has put this hypothesis back on the agenda to explain business fluctuations and monetary non-neutrality. The success of this revival lies in the introduction of strategic uncertainty into a framework of heterogeneous information. The current paper presents this macroeconomic framework and provides a brief overview of recent advances in the literature.

Suggested Citation

  • Romain Baeriswyl & Pierrick Clerc & Camille Cornand, 2025. "Business cycle fluctuations and monetary policy under heterogeneous information," Working Papers 2518, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    • Handle: RePEc:gat:wpaper:2518
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    File URL: https://www.gate.cnrs.fr/RePEc/2025/2518.pdf
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    More about this item

    Keywords

    heterogeneous information; strategic complementarities; higher-order beliefs; coordination; beauty-contest; monetary non-neutrality; business cycle; communication policy; monetary policy;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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