Events at CERGE-EI

Dr. Bartosz Maćkowiak

European Central Bank, Frankfurt am Main, Germany

Authors: Bartosz Mackowiak and Mirko Wiederholt

Abstract:

This seminar will introduce the concept of rational inattention. The seminar will then discuss two papers: “Inattention to Rare Events” and “Business Cycle Dynamics under Rational Inattention”. The first paper studies under what circumstances people prepare little for rare events, and it asks whether the social planner would like people to prepare more for rare events. The second paper develops a dynamic stochastic general equilibrium model with rational inattention by firms and households, and it shows that this model can match the empirical impulse responses of macroeconomic variables to aggregate technology shocks and monetary policy shocks.

Full Texts of the Background Papers:

“Inattention to Rare Events”

“Business Cycle Dynamics under Rational Inattention”