Monetary policy and its informative value
This paper analyzes the welfare effects of economic transparency in a model of monopolistic competition with imperfect common knowledge on the shocks affecting the economy where the central bank has no inflationary bias. Monetary policy entails a dual role, as an action that stabilizes the economy and as a public signal that partially reveals to firms the central bank’s assessment about the economy. Firms are unable to perfectly disentangle the central bank’s signals responsible for the instrument: the central bank optimally balances the action and information purposes of its instrument. We derive the optimal monetary policy and central bank’s disclosure.
Year of publication: |
2007
|
---|---|
Authors: | Baeriswyl, Romain ; Cornand, Camille |
Published in: |
Proceedings. - Federal Reserve Bank of San Francisco. - 2007, March, p. 1-34
|
Publisher: |
Federal Reserve Bank of San Francisco |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Politique monétaire et information hétérogène
Cornand, Camille, (2008)
-
The signaling role of policy actions
Baeriswyl, Romain, (2010)
-
Reducing overreaction to central banks’ disclosures : theory and experiment
Baeriswyl, Romain, (2011)
- More ...