Maćkowiak, Bartosz; Wiederholt, Mirko - In: Credit and Capital Markets – Kredit und Kapital 52 (2019) 4, pp. 573-617
This paper presents a model in which price setting firms decide what to pay attention to, subject to a constraint on information flow. When idiosyncratic conditions are more variable or more important than aggregate conditions, firms pay more attention to idiosyncratic conditions than to...