Conventional economic policy models focus only on selected elements of the central bank balance sheet, in particular … monetary liabilities and sometimes foreign reserves. The canonical model of an "independent" central bank assumes that it … paper considers the relatively novel idea that an independent central bank could be constrained in achieving its policy …

The authors study credible information transmission by a benevolent central bank. They consider two possibilities … of transmitting information have very different consequences. Since the objectives of the central bank and those of … individual investors are not always aligned, private investors might rationally ignore announcements by the central bank. In …