Abstract
Business cycle theories based on incomplete information start from the premise that key economic decisions on pricing, investment or production are often made on the basis of incomplete knowledge of constantly changing aggregate economic conditions. As a result, decisions tend to respond slowly to changes in economic fundamentals, and small or temporary economic shocks may have large and long-lasting effects on macroeconomic aggregates. This article provides an introductory overview of incomplete information-based theories of business cycles, from their origins to the most recent theoretical developments.
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Hellwig, C. (2018). Monetary Business Cycles (Imperfect Information). In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2250
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2250
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