Dispersed information and the non-neutrality of money: fifty years after Lucas, 1972. Issue 1 (2nd January 2022)

• Record Type: Journal Article
• Authors: Clerc, Pierrick; Dos Santos Ferreira, Rodolphe
• Is Part Of: Journal of economic methodology. Volume 29:Issue 1(2022)
• Page Start: 86
• Page End: 104
• Publication Date: 2022-01-02
• Subjects: Robert Lucas -- monetary non-neutrality -- rational inattention -- history of macroeconomics; B22 -- D80 -- E30 -- E40; Economics -- Methodology -- Periodicals; 330.072
• DOI: 10.1080/1350178X.2022.2033811
• Languages: English
• ISSNs: 1350-178X

Abstract

ABSTRACT: This paper highlights the renewed interest in Lucas's explanation of the non-neutrality of money put forward in his 1972 article – explanation based on information dispersion and signal extraction problems – by an increasing part of the literature investigating the transmission mechanism of monetary policy shocks. We review the main contributions to this renewal, and illustrate the relationship between this work and Lucas's own model. We also show that some of the assumptions made by this line of research have been questioned by subsequent developments on the same track, thereby challenging its ability to produce large amounts of monetary non-neutrality and calling for further research.