There is a long tradition in macroeconomics, going back to Phelps (1970), Lucas (1972, 1975), Barro (1976), and King (1982) that breaks monetary neutrality by adding informational frictions. This tradition has recently been revived by Mankiw and Reis (2002), Sims (2003), Woodford (2003a, 2008), Mackowiak and Wiederholt (2009b), and others. While this work proposes new formalizations of the origins of informational frictions, most of it remains focused on the same old theme of how imperfect information about the underlying monetary shocks can break monetary neutrality.
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