Rational inattention, multi-product firms and the neutrality of money

A-Tier
Journal: Journal of Monetary Economics
Year: 2016
Volume: 80
Issue: C
Pages: 1-16

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

In a model where firms set prices under rational inattention we allow them to produce multiple goods. In addition to monetary shocks and firm-specific shocks, good-specific shocks affect firms, consistent with micro price data. When per-good expected losses in profits from inattention are held constant, monetary non-neutrality quickly vanishes as the number of goods per firm rises. This result is due to (1) economies of scope that arise naturally in the multi-product setting, where processing information is costly but using already internalized information is free, and (2) good-specific shocks.

Technical Details

RePEc Handle
repec:eee:moneco:v:80:y:2016:i:c:p:1-16
Journal Field
Macro
Author Count
2
Added to Database
2026-01-28