The DOI matches its Crossref record; 55 of the 55 references it cites were found in a registry or an index.
Optimal Sticky Prices under Rational Inattention
Open accessAbstract
This paper presents a model in which price setting firms decide what to pay attention to, subject to a constraint on information flow. When idiosyncratic conditions are more variable or more important than aggregate conditions, firms pay more attention to idiosyncratic conditions than to aggregate conditions. When we calibrate the model to match the large average absolute size of price changes observed in micro data, prices react fast and by large amounts to idiosyncratic shocks, but only slowly and by small amounts to nominal shocks. Nominal shocks have strong and persistent real effects. (JEL D21, D83, E31, E52)
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Cites
A Mathematical Theory of Communication
Shannon, C. E. (1948) · Bell System Technical Journal · doi:10.1002/j.1538-7305.1948.tb01338.x · Cited by 88,486
Elements of Information Theory
Cover, T. M., & Thomas, J. A. (2001) · Wiley eBooks · doi:10.1002/0471200611 · Cited by 36,808
Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy
Christiano, L. J., Eichenbaum, M., & Evans, C. L. (2005) · Journal of Political Economy · doi:10.1086/426038 · Cited by 6,238
INTEREST AND PRICES: FOUNDATIONS OF A THEORY OF MONETARY POLICY
Woodford, M., & WALSH, C. E. (2005) · Macroeconomic Dynamics · doi:10.1017/s1365100505040253 · Cited by 5,508
Expectations and the neutrality of money
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(1996) · Money, Exchange Rates, and Output · doi:10.7551/mitpress/4758.003.0007 · Cited by 4,369
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Implications of rational inattention
Sims, C. A. (2003) · Journal of Monetary Economics · doi:10.1016/s0304-3932(03)00029-1 · Cited by 3,822
An Estimated Dynamic Stochastic General Equilibrium Model of the Euro Area
Smets, F. R., & Wouters, R. (2003) · Journal of the European Economic Association · doi:10.1162/154247603770383415 · Cited by 3,450
Inflation dynamics: A structural econometric analysis
Galı́, J., & Gertler, M. (1999) · Journal of Monetary Economics · doi:10.1016/s0304-3932(99)00023-9 · Cited by 3,087
Cited by
SELECTIVE ATTENTION AND LEARNING
Schwartzstein, J. (2014) · Journal of the European Economic Association · doi:10.1111/jeea.12104 · Cited by 269
Menu Costs, Aggregate Fluctuations, and Large Shocks
Karadi, P., & Reiff, A. (2019) · American Economic Journal: Macroeconomics · doi:10.1257/mac.20160054 · Cited by 95
Metadata
- Authors
- Maćkowiak, B., & Wiederholt, M.
- Venue
- American Economic Review
- Publisher
- American Economic Association
- Published
- 2009-05-01
- Volume
- 99
- Issue
- 3
- Pages
- 769-803
- ISSN
- 0002-8282 (ISSN-L)
- OpenAlex
- W3111554765
- Cited by
- 963
- References
- 55
- FWCI
- 133.36
- Type
- journal article
- Language
- en
- Open access
- green
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
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