Monetary Policy Inclinations
27 Pages Posted: 11 Jun 2008
Date Written: March 2008
Abstract
We examine whether the publication of forecasts concerning the likely future conduct of monetary policy is socially desirable. Introducing a new central bank loss function that accounts for the deviations from announcements, we incorporate forecasts about future inflation and interest rates into a dynamic monetary model. We show that the announcement of future interest rates is always socially detrimental. However, medium-term inflation projections tend to increase welfare.
Keywords: central banks, commitment, ECB, Federal Reserve, policy inclinations, transparency
JEL Classification: E58
Suggested Citation: Suggested Citation
IZA Institute of Labor Economics
P.O. Box 7240
Bonn, D-53072
Germany
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Register to save articles to
your library
Recommended Papers
-
Transparency and Credibility: Monetary Policy with Unobservable Goals
By Jon Faust and Lars E. O. Svensson
-
Social Value of Public Information: Morris and Shin (2002) is Actually Pro Transparency, Not Con
-
Transparency of Information and Coordination in Economies with Investment Complementarities
-
Transparency of Information and Coordination in Economies with Investment Complementarities
-
Efficient Use of Information and Social Value of Information
Monetary Policy Inclinations
This is a CEPR Discussion Paper. CEPR charges a fee of $8.00 for this paper.
If you wish to purchase the right to make copies of this paper for distribution to others, please select the quantity.
