Nuremberg Research Seminar in Economics on 4 November 2020
You are invited to join the weekly Nuremberg Research Seminar in Economics on 04 November 2020, from 13.15 to 14.45 pm. The seminar will be held via Zoom. Johannes Wohlfart (University of Copenhagen) will be talking about “Uncertainty and information acquisition: Evidence from firms and consumers”.
Please find below the abstract:
We leverage the small open economy Switzerland as a testing ground for basic premises of models of rational inattention. First, we document high levels of information acquisition about the exchange rate compared to the inflation and unemployment rate in samples of both firms and consumers. Second, we provide descriptive evidence that information frictions strongly decline in the stake size of economic decisions involved for firms and consumers, as predicted by models of rational inattention. Third, we show that consistent with a basic premise of rational inattention models, firms’ demand for a report about exchange rate developments increases in an exogenously induced increase in the perceived uncertainty of the exchange rate. Households’ information acquisition, however, is inelastic to an exogenous increase in perceived exchange rate uncertainty.