Kokonas, Nikolaos; Rousakis, Michalis; Smyrniotis, Efthymis - 2023
information and rational expectations. The central bank follows an inflation targeting rule and communicates noisy information … update their beliefs in a Bayesian way and infer the central bank's noisy signal. Through this mechanism, the central bank … central bank loses control over its main target under the inflation targeting policy …