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The Macroeconomic Effects of Infrequent Information With Adjustment Costs

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  • Bonomo, M.
  • Garcia, R.

Abstract

In the last decade, the potential macroeconomic effects of intermittent large adjustments in microeconomic variables such as prices, investment, consumption of durables or employment- a behaviour which may be justified by the presence of kinked adjustment costs- have been studied in models where economic agents continuously observe the optimal level of their decision variable. In this paper, we develop a simple model which introduces infrequent information in a kinked adjustment cost model by assuming that agents do not observe continuously the frictionless optimal level of the control variables.

Suggested Citation

  • Bonomo, M. & Garcia, R., 1997. "The Macroeconomic Effects of Infrequent Information With Adjustment Costs," Cahiers de recherche 9716, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    • Handle: RePEc:mtl:montec:9716
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    2. Etienne Gagnon & David López-Salido & Nicolas Vincent, 2013. "Individual Price Adjustment along the Extensive Margin," NBER Macroeconomics Annual, University of Chicago Press, vol. 27(1), pages 235-281.
    3. Bonomo, Marco, 2000. "Are One-Sided S,s Rules Useful Proxies For Optimal Pricing Rules?," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 20(1), May.
    4. Rene Garcia & Marco Bonomo, 2004. "Optimal Rules under Adjustment Cost and Infrequent Information," Econometric Society 2004 Latin American Meetings 135, Econometric Society.
    5. Alves, Sergio A Lago & Bugarin, Mirta N S, 2006. "The Role of Consumer's Risk Aversion on Price Rigidity," Computing in Economics and Finance 2006 128, Society for Computational Economics.
    6. Edward S. Knotek Ii, 2010. "A Tale of Two Rigidities: Sticky Prices in a Sticky-Information Environment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(8), pages 1543-1564, December.
    7. Bonomo, Marco & Carvalho, Carlos, 2004. "Endogenous Time-Dependent Rules and Inflation Inertia," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(6), pages 1015-1041, December.

    More about this item

    Keywords

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    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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