Does inattentiveness matter for DSGE modelling? an empirical investigation

Jenyu Chou, Patrick Minford, Joshy Easaw

Research output: Working paper


The purpose of this paper is to investigate the empirical performance of the standard New Keynesian dynamic stochastic general equilibrium (DSGE) model in its usual form with full-information rational expectations and compare it with versions assuming inattentiveness- namely sticky information and imperfect information data revision. Using a Bayesian estimation approach on US quarterly data (both real-time and survey) from 1969 to 2015, we find that the model with sticky information fits best and is the only one that can generate the delayed responses observed in the data. The imperfect information data revision model is improved and fits better when survey data is used in place of real-time data, suggesting that it contains extra information.
Original languageEnglish
Place of PublicationCardiff
PublisherCardiff Business School, Cardiff University
Number of pages61
Publication statusPublished - 2021

Publication series

NameCardiff Economics Working Papers
ISSN (Print)1749-6010


  • Expectation formation
  • Inattentive expectation
  • New Keynesian
  • DSGE
  • Bayesian estimation


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