Macroeconomic models with sticky information include an infinite number of lagged expectations. Several authors have developed specialized solutions algorithms to solve these models under rational expectations. We demonstrate that it is also possible to implement this class of models in...

In this paper we analyze how inattentiveness in capital investment decisions shapes business cycle dynamics in a dynamic stochastic general equilibrium (DSGE) model with inattentiveness. We find that the model with pervasive inattentiveness matches several business cycle moments much better than...