We study the response of stock prices to monetary policy, distinguishing effects of exogenous shocks from "Delphic" shocks that reveal the Federal Reserve's macroeconomic forecasts. To decompose monetary policy surprises into these separate components we construct a measure of Federal Reserve...

Using a model of optimizing central bank behavior, I estimate the dynamic behavior of preferences, which are captured by the relative weight put on stabilizing inflation versus minimizing the output gap. Unlike previous work, I let this parameter vary continuously over time. There is a drastic...

We propose a novel framework to gauge the credibility of central banks’ commitment to an inflation-targeting regime. Our framework combines survey data on macroeconomic forecasts with high-frequency financial market data to understand how inflation targeting makes economic agents change their...