This paper aims at assessing whether, and how, communication of central bank’s forecast might affect economic dynamics. In a simple new Keynesian environment it is assumed that private sector conditions its own expectations to central bank’s forecasts. Private sector’s prior expectations...

This paper examines the interactions between monetary policy and stability of interbank money markets. After showing some empirical evidence of a central bank's concern for money market stability I derive a forward smoothing interest rate rule moving from an explicit target in terms of a...