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The Effect of Imperfect Information on Aggregate Supply: Case Study the Economy of Iran | ||
| پژوهشنامه اقتصاد کلان Macroeconomics Research Letter | ||
| Volume 14, Issue 28, April 2020, Pages 261-290 PDF (1.23 M) | ||
| Document Type: Scientific paper | ||
| DOI: 10.22080/iejm.2020.9084.1448 | ||
| Authors | ||
| Seyed Fakhroddin Fakhr Hosseini* 1; Yousef Eisazadeh Roshan2 | ||
| 1Assistant professor, Department of Economics,, Islamic Azad University,, Tonekabon, Branch, Iran | ||
| 2Assistant professor, Department of Economics, University of Mazandaran, Babolsar, Iran | ||
| Receive Date: 28 July 2019, Revise Date: 25 February 2020, Accept Date: 06 June 2020 | ||
| Abstract | ||
| Since the birth of business cycle theory, economists have always been struggling to examine the nature of the market imperfection. In macroeconomic literature, economists have been looking at whether friction causes the short-run aggregate supply curve to be upward sloping rather than vertical. To illustrate this subject in this paper, we discuss the micro-foundations for two classes of imperfect information models: models with partial information, where agents observe economic conditions with noise, and models with delayed information, where they observe economic conditions with a lag. This paper surveys the research in the past decade on imperfect information models of aggregate supply and the Phillips curve. The data in this article are related to the fixed prices in the year 2011 and run annually from 1966 to 2017 on a per capita basis. Having logarithms taken, the variables are de-traded through Hodrick- Prescott filter. Finally, the calibration of parameters are assessed, variables are simulated and compared with real data. The results show that the introduced model can simulate the impact of shocks on macroeconomic variables. We derive the results of these two classes of models for the existence of non-vertical aggregate supply, a positive aggregate demand shock still leads to an increase in both prices and output, and stronger real and informational rigidities still enhance the response of output and attenuate the response of prices. | ||
| Keywords | ||
| Imperfect Information; Aggregate Supply; Models with partial and delayed information | ||
| References | ||
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