Booms and busts with dispersed information

• 成果类型: Article
• 署名作者: Benhima, Kenza
• 署名单位: University of Lausanne
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2018.12.004
• 发表日期: 2019
• 页码: 32-47
• 关键词: Imperfect common knowledge; expectations; recessions

摘要

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. (C) 2019 Elsevier B.V. All rights reserved.