Bad news about future economic developments have larger effects than good news. The result is obtained by means of a simple nonlinear approach based on SVAR and SVARX models. We interpret the asymmetry as arising from the uncertainty surrounding economic events whose effects are not perfectly predictable. Uncertainty generates adverse effects on the economy, amplifying the effects of bad news and mitigating the effects of good news.

This paper argues that not only actual lockdowns can affect economies but also noisy information about them. We construct a New Keynesian model with imperfect information about how long the lockdown would last. On the one hand, a false signal about the lockdown lowers consumption, investment, employment, and output, and this effect can be quantitatively sizable. On the other hand, a true information about a lockdown being introduced can also be misinterpreted and hence cause an impact on agents’ decisions being quantitatively different from the one desired by the authorities. To the extent that the latter have less noisy information about future lockdowns than the private sector, they can reduce these undesired fluctuations by precisely communicating the lockdown policy. Importantly, under some circumstances only radical improvements in information precision are successful.

Logics of joint strategic ability have recently received attention, with arguably the most influential being those in a family that includes Coalition Logic (CL) and Alternating-time Temporal Logic (ATL). Notably, both CL and ATL bypass the epistemic issues that underpin Schelling-type coordination problems, by apparently relying on the meta-level assumption of (perfectly reliable) communication between cooperating rational agents. Yet such epistemic issues arise naturally in settings relevant to ATL and CL: these logics are standardly interpreted on structures where agents move simultaneously, opening the possibility that an agent cannot foresee the concurrent choices of other agents. In this paper we introduce a variant of CL we call Two-Player Strategic Coordination Logic (SCL2). The key novelty of this framework is an operator for capturing coalitional ability when the cooperating agents cannot share strategic information. We identify significant differences in the expressive power and validities of SCL2 and CL2, and present a sound and complete axiomatization for SCL2. We briefly address conceptual challenges when shifting attention to games with more than two players and stronger notions of rationality.

This article presents a solution algorithm for linear rational expectation models under imperfect information, in which some decisions are made based on smaller information sets than others. In our solution representation, imperfect information does not affect the coefficients on crawling variables, which implies that, if a perfect-information model exhibits saddle-path stability, for example, the corresponding imperfect-information models also exhibit saddle-path stability. However, imperfect information can significantly alter the quantitative properties of a model. Indeed, this article demonstrates that, with a predetermined wage contract, the standard RBC model remarkably improves the correlation between labor productivity and output.

In the existing literature, panic-based bank runs are triggered by a commonly acknowledged and observed sunspot signal. There are only two equilibrium realizations resulting from the commonly observed sunspot signal: Everyone runs or no one runs. I consider a more general and more realistic situation in which consumers observe noisy private sunspot signals. If the noise in the signals is sufficiently small, there exists a proper correlated equilibrium for some demand deposit contracts. A full bank run, a partial bank run (in which some consumers panic whereas others do not), or no bank run occurs, depending on the realization of the sunspot signals. If the probabilities of runs are small, the optimal demand deposit contract tolerates full and partial bank runs.

This paper develops a dynamic stochastic general equilibrium (DSGE) model with sticky prices and sticky wages, in which agents have imperfect information on the stance and direction of monetary policy. Agents respond by using Kalman filtering to unravel persistent and temporary monetary policy changes in order to form optimal forecasts of future policy actions. Our results show that a New Keynesian model with imperfect information and real rigidities can account for several key effects of an expansionary monetary policy shock: the hump-shaped increase in output, the delayed and gradual rise in inflation, and the fall in the nominal interest rate.