Using the Consensus Economics dataset with individual expertforecasts from G7 countries we investigate determinants of disagreement (crosssectionaldispersion of forecasts) about six key economic indicators. Disagreementabout real variables (GDP, consumption, investment and unemployment)has a...

When a policymaker is better informed than the public, public beliefs about the hidden informationemerge as additional state variables, managed by the policymaker. General methodsare presented to compute optimal commitment and discretion policies.Under commitment, policy is additive in two...

Monetary policy is most effective when public beliefs about future policies are activelymanaged. This is the appeal of policy rules and commitment strategies, typically absent underdiscretion. But when a policymaker has some private information — as is the case in reality— belief management...

Over the past 15 years there has been remarkable progress in the specification and estimation of dynamic stochastic general equilibrium (DSGE) models. Central banks in developed and emerging market economies have become increasingly interested in their usefulness for policy analysis and...

The remarkable stability of low domestic inflation in many countries requires explanation. In this paper, a number of competing hypotheses are evaluated on a stand-alone basis, and all are found to be inadequate. This includes the view that this outcome has been solely the result of more...

The paper evaluates the performance of three popular monetary policy rules when the central bank is learning aboutthe parameter values of a simple New Keynesian model. The three policies are: (1) the optimal non-inertial rule; (2)the optimal history-dependent rule; (3) the optimal price-level...

This paper studies an advantage of commitment over discretion when a central bankobserves only noisy measures of current inflation and output, in the context of an optimizingmodel with nominal-price stickiness. Under a commitment regime, if current policy turns outto be too expansionary...

Using a model of island economy where financial markets aggregate dispersed informationof the public, we analyze how two-way communication between the central bankand the public affects inflation dynamics. When inflation target is observable and credibleto the public, markets provide the bank...

The estimation of an ordered probit model for currency reforms trying to end 31hyperinflations and three big inflations of the 20th century shows that the introduction of anindependent central bank and the adoption of a credibly fixed exchange rate are crucial for the successof a currency...

This paper provides a stylized choice-thoretic model to analyze optimal monetary policies among interdependent economies. In response to marcoeconomic shocks, policymakers strike a balance between two objectives. The first is to stabilize marginal costs and markups to offset the distortions...