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http://hdl.handle.net/10419/56368
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| Title: | | Information acquisition and learning from prices over the business cycle  |
| Authors: | | Mäkinen, Taneli Ohl, Björn |
| Issue Date: | | 2012 |
| Series/Report no.: | | SSE/EFI Working Paper Series in Economics and Finance 740 |
| Abstract: | | We study firms' incentives to acquire costly information in booms and recessions to understand the role of endogenous information in explaining asymmetric business cycles. When the economy has been in a boom in the previous period, and firms enter the current period with an optimistic belief, the incentive to acquire information is weaker than when the economy has been in a recession and firms share a pessimistic belief. However, the price system, in transmitting information from informed to uninformed firms, moderates asymmetric incentives in information acquisition and renders the aggregate learning outcome approximately acyclical. Our results challenge the prevailing view of procyclical learning as the source of asymmetric business cycles. |
| Subjects: | | information choice rational expectations asymmetric information Bayesian learning strategic substitutability business cycle asymmetries |
| JEL: | | D51 D82 D83 D84 E39 |
| Document Type: | | Working Paper |
| Appears in Collections: | | SSE/EFI Working Paper Series in Economics and Finance, EFI - The Economic Research Institute, Stockholm School of Economics
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