Real Rigidity, Nominal Rigidity, and the Social Value of Information
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Does welfare improve when firms are better informed about the state of the economy and can thus better coordinate their production and pricing decisions? We address this question in an elementary business-cycle model that highlights how the dispersion of information can impede both kinds of decisions and, in this sense, be the source of both real and nominal rigidity. Within this context we develop a taxonomy for how the social value of information depends on the two rigidities, on the sources of the business cycle, and on the conduct of monetary policy. (JEL D21, D82, D83, E32, E52)
Date issued
2016-01Department
Massachusetts Institute of Technology. Department of EconomicsJournal
American Economic Review
Publisher
American Economic Association
Citation
Angeletos, George-Marios, Luigi Iovino, and Jennifer La’O. “ Real Rigidity, Nominal Rigidity, and the Social Value of Information † .” American Economic Review 106, no. 01 (January 2016): 200–227.
Version: Final published version
ISSN
0002-8282
1944-7981