This paper considers the determination of aggregate price level under dispersed information.A Central Bank sets policy …. Information revealed to theagents and the bank is determined endogenously. It is shown that the aggregate state ofthe economy is … representative agent has perfect informationwhile the Bank has partial information. The Bank’s information set affects fluctuations …

, centralbanks have made extensive use of both new and existing toolsfor supplying central bank money to financial institutions …

length of time between bank examinations affects thequality of information available to supervisors. For thesepurposes, we … condition of a bank. Our analysisassumes that examination information incorporates twotypes of data: information available from … information that can be obtained onlythrough on-site examinations, such as confidential informationabout a bank’s troubled assets …

The paper evaluates the performance of three popular monetary policy rules when the central bank is learning aboutthe … parameters is introduced, it is found that the central bank makes monetary policy mistakes,which affect welfare to a different …

, if current policy turns outto be too expansionary (contractionary) because of the bank’s information problem …,subsequent policies should be slightly contractionary (expansionary). By following thisapproach, the central bank can improve the trade …-off between the fluctuations of its goalvariables caused by economic shocks and their fluctuations caused by the bank’s response …

Monetary policy has traditionally been viewed as theprocess by which a central bank uses its influence overthe supply … alter that amount.” In fact, the very termmonetary policy suggests a central bank’s policy toward thesupply of money or the … the termmonetary policy to refer to a central bank’s interest rate policy.[...] …