
Open access
Autor(in)
Datum
2011-07Typ
- Working Paper
ETH Bibliographie
yes
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Abstract
The DSGE model with endogenous and time-varying sticky information in Dräger (2010) is extended by allowing agents’ recursive choice between forecasts under rational or sticky information to affect the model solution. Dynamic equilibrium paths generate highly persistent series for output, inflation and the nominal interest rate. Agents choose predictors in a near-rational manner and we find that the share of agents with rational expectations reacts to the overall variability of aggregate variables. The model can generate hump-shaped responses of inflation and output to a monetary policy shock if the degree of inattentiveness is sufficiently high. Finally, feedback from agents’ degree of inattentiveness to the model solution affects the determinacy region of the model. The Taylor principle is then only a necessary condition for determinacy, and monetary policy should target the output gap as well in order to ensure a unique and stable solution. Mehr anzeigen
Persistenter Link
https://doi.org/10.3929/ethz-a-006543954Publikationsstatus
publishedZeitschrift / Serie
KOF Working PapersBand
Verlag
KOF Swiss Economic Institute, ETH ZurichThema
DSGE models; MONETARY POLICY; Persistence; Endogenous sticky information; MAKROÖKONOMISCHE MODELLE (OPERATIONS RESEARCH); INFLATION; GELDPOLITIK; MACROECONOMIC MODELS (OPERATIONS RESEARCH); Heterogeneous expectationsOrganisationseinheit
03716 - Sturm, Jan-Egbert / Sturm, Jan-Egbert
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute
ETH Bibliographie
yes
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