We use controlled laboratory experiments to test the causal effects of central bank communication on economic expectations and to distinguish the underlying mechanisms of those effects. In an experiment where subjects learn to forecast economic variables, we find that central bank communication...

This paper examines the value of direct communication to households about inflation and the uncertainty around inflation statistics. All types of information about inflation are effective at immediately managing inflation expectations, with information about outlooks being more effective and...

The effectiveness of monetary policy depends, to a large extent, on market expectations of its future actions. In a standard New Keynesian business-cycle model with rational expectations, systematic monetary policy reduces the variance of inflation and the output gap by at least two-thirds....

We provide a comprehensive assessment of five monetary policy regimes-inflation targeting (IT), dual mandate (DM), average inflation targeting under 4-period (AIT-4) and 10-period (AIT-10) horizons, price level targeting (PLT), and nominal GDP level targeting (NGDP)-in a unified experimental...