Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments July 28, 2023 erstellt
Description:
The Optimal Price Index (OPI) stabilization policy traditionally assigns greater importance to stabilize prices in sectors with stickier prices based on multi-sector models with full information or exogenous information frictions. The current paper challenges this prevailing policy prescription by introducing rational inattention. Surprisingly, the OPI attaches a smaller weight to a sector with stickier prices. This counterintuitive result stems from the endogenous relationship between attention and nominal rigidities: firms in sectors with more flexible prices pay less attention to macroeconomic conditions. We provide empirical evidence that supports this mechanism