I study the implications of productivity shocks in a model where agents observe the aggregate level of productivity but not its permanent and transitory components separately. The model''s predictions under learning differ substantially from those under full information and are in line with...

I study the implications of productivity shocks in a model where agents observe the aggregate level of productivity but not its permanent and transitory components separately. The model`s predictions under learning differ substantially from those under full information and are in line with...