Monetary Policy and Price Responsiveness to Aggregate Shocks under Rational Inattention

Material TypeArticleLanguageEnglish
TitleMonetary Policy and Price Responsiveness to Aggregate Shocks under Rational Inattention Author(S)LUIGI PACIELLO (Author)
Abstract  This paper studies a general equilibrium model that is consistent with recent empirical evidence showing that the U.S. price level and inflation are much more responsive to aggregate technology shocks than to monetary policy shocks. Specifically, we show that the fact that aggregate technology shocks are more volatile than monetary policy shocks induces firms to pay more attention to the former than to the latter. However, most important ...Paginationp1375–1399
SubjectEconomicsDescriptorsEconomics
Journal TitleJournal of Money, Credit, and Banking  
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