Information Rigidity and the Expectations Formation Process : A Simple Framework and New Facts
Information Rigidity and the Expectations Formation Process : A Simple Framework and New Facts
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Author(s): Coibion, Olivier
ISBN No.: 9781475519242
Pages: 55
Year: 201212
Format: Trade Paper
Price: $ 27.60
Dispatch delay: Dispatched between 7 to 15 days
Status: Available

We propose a new approach to test the full-information rational expectations hypothesis which can identify whether rejections of the arise from information rigidities. This approach quantifies the economic significance of departures from the and the underlying degree of information rigidity. Applying this approach to U.S. and international data of professional forecasters and other agents yields pervasive evidence consistent with the presence of information rigidities. These results therefore provide a set of stylized facts which can be used to calibrate imperfect information models. Finally, we document evidence of state-dependence in the expectations formation process.


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