This paper argues that constraining people to choose consumption and labor under finite Shannon capacity produces results in line with U.S. business cycle data as well as secular movements in consumption and labor supply. The model has simple partial equilibrium setting in which risk averse...

It is critical that central bankers have the ability to communicate their monetary policy goals and intentions involving employment and price stability to the public. The task is complicated in an economy that includes many firms and households in an era of information overload

Professional forecasters generally better predict inflation than household surveys and often outperform naïve year-ahead forecasts based on the Fed's 2 percent target. Constants, the basis of the naïve forecasts, benefit because they are not subject to month-to-month volatility

This paper studies the implications of information-processing limits on the consumption and savings behavior of households through time. It presents a dynamic model in which consumers rationally choose the size and scope of the information they want to process about their financial...