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Learning from Prices: Public Communication and Welfare / Manuel Amador, Pierre-Olivier Weill.
- Format:
- Book
- Author/Creator:
- Amador, Manuel.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w14255.
- NBER working paper series no. w14255
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Learning from Prices
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2008.
- Summary:
- We study the effect of releasing public information about productivity or monetary shocks when agents learn from nominal prices. While public releases have the benefit of providing new information, they can have the cost of reducing the informational efficiency of the price system. We show that, when agents have private information about monetary shocks, the cost can dominate, in that public releases increase uncertainty about fundamentals. In some cases, public releases can create or eliminate multiple equilibria. Our results are robust to adding velocity shocks, imperfectly observable prices, large idiosyncratic shocks, and introducing a bond market.
- Notes:
- Print version record
- August 2008.
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