We study the general problem of information design for a policymaker—a central bank—that communicates its private information (the ``state") to the public. We show that it is optimal for the policymaker to partition the state space into a finite number of ``clusters” and to communicate to...

Financial markets and macroeconomic environments are often characterized by positive externalities. In these environments, transparency may reduce expected welfare from an ex-ante point of view: public announcements serve as a focal point for higher-order beliefs and affect agents' behaviour...