Learning and Signals under Discretionary Monetary Policy
type="main" xml:lang="en"> <title type="main">Abstract</title> <p>This paper aims at assessing the relevance of communicating central bank's forecasts to the private sector under discretionary monetary policy. In a New Keynesian environment, the central bank and the private sector have different information sets. The private sector uses the central bank's expectations as a signal in order to update its priors, which are constituted by standard adaptive learning expectations. E-stability is positively affected by a high correlation between actual inflation and the signal about inflation. Numerical simulations show that the presence of signals is beneficial both in the long and in the short run. </section>
Year of publication: |
2014
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Authors: | Marzioni, Stefano |
Published in: |
Economic Notes. - Banca Monte dei Paschi di Siena SpA. - Vol. 43.2014, 3, p. 211-231
|
Publisher: |
Banca Monte dei Paschi di Siena SpA |
Saved in:
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