The forward guidance puzzle

With short-term interest rates at the zero lower bound, forward guidance has become a key tool for central bankers, and yet we know little about its effectiveness. Standard medium-scale DSGE models tend to grossly overestimate the impact of forward guidance on the macroeconomy - a phenomenon we call the forward guidance puzzle. We explain why this is the case and describe one approach to addressing this issue.

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Year of publication:	2012
Authors:	Del Negro, Marco ; Giannoni, Marc ; Patterson, Christina
Publisher:	New York, NY : Federal Reserve Bank of New York
Subject:	forward guidance \| DSGE models

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Series:	Staff Report ; 574
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	728772205 [GVK] hdl:10419/93598 [Handle] RePEc:fip:fednsr:574 [RePEc]
Classification:	C53 - Forecasting and Other Model Applications ; c54 ; E52 - Monetary Policy (Targets, Instruments, and Effects)
Source:	EconStor

Persistent link: https://www.econbiz.de/10010333578