Central Bank of Chile working paper deals with pricing norms


A working paper released by the Central Bank of Chile dispels the standard assumption in macroeconomics that pricing decisions are taken by single-product firms.

The paper's author, Ernesto Pastén, explains how he augmented the rational inattention model of price-setting (in which firms have a limited capacity to process information) to allow firms to produce multiple goods.

The research highlights the economies of scale in the use of information that arise in this context, which firms exploit

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