literature is that being transparent about operations and beliefs hinders the central bank in achieving the best outcome. In … other words, a central bank needs flexibility and therefore cannot be fully transparent. Using a forward-looking New …-Keynesian model, we find exactly the opposite. A central bank that is conservative improves output stabilization by being transparent …

supervision. Central bank communication will constitute a central policy tool for that purpose. The paper asks how such … times, but can have a substantially larger effect during periods of financial stress. Moreover, central bank communication …

interest rate, which respects the intertemporal budget constraint of the consolidated Central Bank and fiscal authority … stock of base money through an irreversible open market purchase by the Central Bank of non-monetary sovereign debt held by … assets by the Central Bank funded through an irreversible or permanent increase in the stock of base money, relaxes the …

also contributed, through the deeply subsidised bank funding it provided through the 3-year LTROs, half of a mechanism to …

We study the effects of Central Bank transparency on inflation and the output gap. We thus first identify a small …

) assets are bank-specific. We show that when the outside options of needy banks are weak, surplus banks may strategically … under-provide lending, thereby inducing inefficient sales of bank-specific assets. A central bank can ameliorate this …

complementarity between decisions of firms and of the central bank, which gives rise to multiple equilibria: when firms use foreign … borrowing, they raise the cost of devaluation to the central bank, which in turn makes foreign borrowing more attractive …

This paper studies the strategic interaction between a bank whose deposits are randomly withdrawn, and a lender of last … resort (LLR) that bases its decision on supervisory information on the quality of the bank’s assets. The bank is subject to a …. Moreover, when the LLR does not charge penalty rates, the bank chooses the same level of risk and a smaller liquidity buffer …

The establishment of the European Central Bank (ECB) presents a rare opportunity to define the operations of a central … bank with no prior track record. Before the ECB specifies an, as yet undefined, operational target this paper asks what … might be learnt from the recent experience of inflation targeting at the Bank of England. We consider whether there should …