TY - JOUR

T1 - Information frictions among firms and households

AU - Link, Sebastian

AU - Peichl, Andreas

AU - Roth, Christopher

AU - Wohlfart, Johannes

PY - 2023

Y1 - 2023

N2 - Using surveys of German firms and households, we document novel stylized facts about the extent of information frictions among the two groups. First, firms’ expectations about macroeconomic variables are closer to expert forecasts and less dispersed than households’, consistent with higher information frictions among households. Second, the degree of dispersion and the distance from expert forecasts varies more across groups of households than across groups of firms. Third, firms update their policy rate expectations less than households when provided with an expert forecast, consistent with firms holding stronger priors. Our results have implications for modeling choices, macroeconomic dynamics, and policies.

AB - Using surveys of German firms and households, we document novel stylized facts about the extent of information frictions among the two groups. First, firms’ expectations about macroeconomic variables are closer to expert forecasts and less dispersed than households’, consistent with higher information frictions among households. Second, the degree of dispersion and the distance from expert forecasts varies more across groups of households than across groups of firms. Third, firms update their policy rate expectations less than households when provided with an expert forecast, consistent with firms holding stronger priors. Our results have implications for modeling choices, macroeconomic dynamics, and policies.

U2 - 10.1016/j.jmoneco.2023.01.005

DO - 10.1016/j.jmoneco.2023.01.005

M3 - Journal article

VL - 135

SP - 99

EP - 115

JO - Journal of Monetary Economics

JF - Journal of Monetary Economics

SN - 0304-3932

ER -