Business cycle dynamics under rational inattention

We develop a dynamic stochastic general equilibrium model with rational inattention by households and firms. Consumption responds slowly to interest rate changes because households decide to pay little attention to the real interest rate. Prices respond quickly to some shocks and slowly to other shocks. The mix of fast and slow responses of prices to shocks matches the pattern found in the empirical literature. Changes in the conduct of monetary policy yield very different outcomes than in models currently used at central banks because systematic changes in policy cause reallocation of attention by decision-makers in households and firms. JEL Classification: D83, E31, E32, E52business cycles, information choice, monetary policy, rational inattention

Optimal sticky prices under rational inattention

This paper presents a model in which price setting firms decide what to pay attention to, subject to a constraint on information flow. When idiosyncratic conditions are more variable or more important than aggregate conditions, firms pay more attention to idiosyncratic conditions than to aggregate conditions. When we calibrate the model to match the large average absolute size of price changes observed in micro data, prices react fast and by large amounts to idiosyncratic shocks, but prices react only slowly and by small amounts to nominal shocks. Nominal shocks have strong and persistent real effects. We use the model to investigate how the optimal allocation of attention and the dynamics of prices depend on the firms’ environment. JEL Classification: E3, E5, D8rational inattention, real effects of nominal shocks, sticky prices

Macroeconomic Dynamics under Rational Inattention

This paper develops a general equilibrium model with Dixit-Stiglitz preferences, monopolistic competition and rational inattention on the side of both households and firms. We show how to solve a general equilibrium model with rational inattention. We use the model to study how rational inattention affects the impulse responses of macroeconomic variables to monetary policy shocks and technology shocks.

Microcomputer Intelligence for Technical Training (MITT): The evolution of an intelligent tutoring system

Microcomputer Intelligence for Technical Training (MITT) uses Intelligent Tutoring System (OTS) technology to deliver diagnostic training in a variety of complex technical domains. Over the past six years, MITT technology has been used to develop training systems for nuclear power plant diesel generator diagnosis, Space Shuttle fuel cell diagnosis, and message processing diagnosis for the Minuteman missile. Presented here is an overview of the MITT system, describing the evolution of the MITT software and the benefits of using the MITT system

MITT writer and MITT writer advanced development: Developing authoring and training systems for complex technical domains

MITT Writer is a software system for developing computer based training for complex technical domains. A training system produced by MITT Writer allows a student to learn and practice troubleshooting and diagnostic skills. The MITT (Microcomputer Intelligence for Technical Training) architecture is a reasonable approach to simulation based diagnostic training. MITT delivers training on available computing equipment, delivers challenging training and simulation scenarios, and has economical development and maintenance costs. A 15 month effort was undertaken in which the MITT Writer system was developed. A workshop was also conducted to train instructors in how to use MITT Writer. Earlier versions were used to develop an Intelligent Tutoring System for troubleshooting the Minuteman Missile Message Processing System