Booms and Busts with Dispersed Information

Détails

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Etat: Public
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Licence: Non spécifiée
ID Serval
serval:BIB_A7AD96D2AADB
Type
Article: article d'un périodique ou d'un magazine.
Collection
Publications
Institution
Titre
Booms and Busts with Dispersed Information
Périodique
Journal of Monetary Economics
Auteur(s)
Benhima K.
ISSN
0304-3932
Statut éditorial
Publié
Date de publication
2019
Peer-reviewed
Oui
Volume
107
Pages
32-47
Langue
anglais
Résumé
Dispersed information can generate booms and busts in economic activity. Boom-bust dynamics appear when firms are initially over-optimistic about demand due to a noisy private news. Consequently, they overproduce, which generates a boom and depresses their markups. Because the news is private, firms cannot relate these low markups to aggregate optimism. As low markups can also signal low demand, this overturns their expectations, generating a bust. We emphasize a novel role for imperfect common knowledge: dispersed information makes firms ignorant about their competitors’ actions, which makes them confuse high noise-driven supply with low fundamental demand.
Mots-clé
Imperfect Common Knowledge, Expectations, Recessions
Création de la notice
22/08/2013 14:47
Dernière modification de la notice
26/05/2020 5:20
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