| Number |
CREPEDP-96 |
| Publication Date |
March 2021; Revised in August 2022, and January 2025 |
| Title |
Information Rigidity and Elastic Attention: Evidence from Japan
|
| Author |
Cheng Chen, Takahiro Hattori and Yulei Luo
|
| Abstract |
Recent empirical studies have found substantial information rigidities faced by consumers and
firms, when they forecast macro variables (Coibion and Gorodnichenko (2015) and Coibion et al. (2018)). In this study, we examine how information rigidities behave differently when it comes to forecasting industry- and firm-level variables. Using a firm-level panel dataset that contains quantitative forecasts of the (macro) inflation rate, the industry-specific inflation rate, and firm sales, we present evidence that the information rigidity associated with forecasting (macro) inflation is more pervasive than those associated with forecasting the other two variables. We back out the unobservable marginal cost of acquiring and processing information for the three target variables and find that the cost associated with digesting industry-level information is the highest among them.
|
| Keywords |
information rigidity, expectations formation, macro and industry-specific shocks
|
| Other information |
Paper in English (52 pages) |