Tell Me Something I Don't Already Know: Learning in Low‐ and High‐Inflation Settings
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Journal Article
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The Econometric Society
Abstract
Using randomized control trials (RCTs) applied over time in different countries, we study whether the economic environment affects how agents learn from new information. We show that as inflation rose in advanced economies, both households and firms became more attentive and informed about publicly available news about inflation, leading them to respond less to exogenously provided information about inflation and monetary policy. We also study the effects of RCTs in countries where inflation has been consistently high (Uruguay) and low (New Zealand) as well as what happens when the same agents are repeatedly provided information in both low‐ and high‐inflation environments (Italy). Our results broadly support models in which inattention is an endogenous outcome that depends on the economic environment.Description
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Econometrica, ISSN: 0012-9682 (Print), The Econometric Society, 93(1), 229-264. doi: 10.3982/ecta22764
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© 2025 The Authors. Econometrica published by John Wiley & Sons Ltd on behalf of The Econometric Society. Yuriy Gorodnichenko is the corresponding author on this paper. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made