Detailed Information on Publication Record
2012
Information Frictions and Monetary Policy
MATĚJKA, FilipBasic information
Original name
Information Frictions and Monetary Policy
Name in Czech
Informační frikce a měnová politika
Authors
MATĚJKA, Filip
Edition
ACTA VŠFS, Praha, Vysoká škola finanční a správní, o.p.s. 2012, 1802-792X
Other information
Language
English
Type of outcome
Článek v odborném periodiku
Field of Study
50200 5.2 Economics and Business
Country of publisher
Czech Republic
Confidentiality degree
není předmětem státního či obchodního tajemství
Organization unit
University of Finance and Administration
Keywords in English
nominal rigidity; information frictions; monetary economics
Tags
Reviewed
Změněno: 11/7/2012 09:50, Bc. Barbora Vandová
Abstract
V originále
Real effects of monetary policy depend crucially on the nature of nominal rigidities. These rigidities are typically modelled as sticky prices with explicit assumptions on either frequency of price adjustments (Calvo-style models) or on the cost of adjustment (menu cost models). However, recent empirical work cast doubts on these workhorses of standard New Keynesian models. This paper discusses another approach to nominal frictions, which is based on the assumption that agents face difficulties processing information. If, for instance, price-setters learn about an interest rate cut with a delay, then their price also responds sluggishly. This rigidity implies positive temporary effects on output and unemployment. We conclude that models based on information frictions can account for several empirical facts other model have difficulties reconciling with, such as sluggish responses of both real and nominal variables, frequent but staggered price changes or a steeper Phillips curve and higher profit losses with more volatile environments. Moreover, rational inattention provides important implications for policy.