.png){kind=icon}
.png){kind=icon}
Return
Forward Guidance without Common Knowledge
.png){kind=icon}
OA
AI
DOI：10.1257/aer.20161996.png)
.png){kind=icon}
.png){kind=icon}
Share.png){kind=icon}
Save
Abstract
En 中文
How does the economy respond to news about future policies or future fundamentals? Standard practice assumes that agents have common knowledge of such news and face no uncertainty about how others will respond. Relaxing this assumption attenuates the general equilibrium effects of news and rationalizes a form of myopia at the aggregate level. We establish these insights within a class of games which nests, but is not limited to, the New Keynesian model. Our results help resolve the forward-guidance puzzle, offer a rationale for the front-loading of fiscal stimuli, and illustrate more broadly the fragility of predictions that rest on long series of forward-looking feedback loops.
Keywords:
INCOMPLETE INFORMATION
ITERATED EXPECTATIONS
RATIONAL INATTENTION
STICKY PRICES
SOCIAL VALUE
MULTIPLIER
MARKETS
AI Summary
Key information extracted from the uploaded paper, including a brief overview, abstract, background, key highlights, visual analysis, and future outlook.
Journal
IF:
11.6
Papers:
5.0K
Citations:
7.5W
Organization
No organization information available