TY  - JOUR
AU  - Caplin,Andrew
AU  - Leahy,John
TI  - The Economics of Adjustment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4687
PY  - 1994
Y2  - March 1994
UR  - http://www.nber.org/papers/w4687
L1  - http://www.nber.org/papers/w4687.pdf
N1  - Author contact info:
Andrew Caplin
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY  10012
Tel: 212/998-8950
Fax: 212/995-3932
E-Mail: andrew.caplin@nyu.edu

John V. Leahy
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY  10012
Tel: 212/992-9770
E-Mail: john.leahy@nyu.edu
AB  - In this paper we argue that many topics in macroeconomics can be viewed as part of the broader theory of the economics of adjustment. We argue that existing approaches to the economics of adjustment take a very narrow view of the role of information.  We outline an approach to this topic that stresses the role of learning and information externalities, and discussed through examples how these concerns alter the qualitative nature of the adjustment process.  In particular, there appears to be a general bias towards the underprovision of information in a variety of settings which leads to inefficient adjustment.
ER  -