Showing 61 - 70 of 2,584
In a financial market where traders are risk averse and short lived, and prices are noisy, asset prices today depend on the average expectation today of tomorrow's price. Thus (iterating this relationship) the date 1 price equals the date 1 average expectation of the date 2 average expectation...
Persistent link: https://www.econbiz.de/10012757289
FocusThe paper examines the relationship between monetary policy and market prices through the lens of central bank communication. Central bankers use forward guidance to steer market expectations of future monetary policy moves. At the same time, they rely on market prices to gauge the likely...
Persistent link: https://www.econbiz.de/10012929426
Persistent link: https://www.econbiz.de/10013431903
What are the welfare effects of enhanced dissemination of public information through the media and disclosures by market participants with high public visibility? For instance, is it always desirable to have frequent and timely publications of economic statistics by government agencies and the...
Persistent link: https://www.econbiz.de/10014127213
One role of monetary policy is to coordinate expectations in the economy and greater transparency of monetary policy may lead to greater coordination. But if transparent monetary policy helps coordinate expectations, then it must also magnify mistakes
Persistent link: https://www.econbiz.de/10014088396
Incomplete information games, local interaction games and random matching games are all special cases of a general class of interaction games (Morris (1997)). In this paper, we use this equivalence to present a unified treatment of arguments generating uniqueness in games with strategic...
Persistent link: https://www.econbiz.de/10014088718
In a simple model of currency crises caused by creditor coordination failure, we show that bailouts that reduce ex post inefficiency will sometimes create ex ante moral hazard but will sometimes enhance the incentives for governments to take preventative actions. This model helps us understand a...
Persistent link: https://www.econbiz.de/10014088720
Persistent link: https://www.econbiz.de/10013422362
Persistent link: https://www.econbiz.de/10013422649
Traders with short horizons and privately known trading limits interact in a market for a risky asset. Risk-averse, long horizon traders supply a downward sloping residual demand curve that face the short-horizon traders. When the price falls close to the trading limits of the short horizon...
Persistent link: https://www.econbiz.de/10014075358