Money Talks

30 Pages Posted: 22 Aug 2009 Last revised: 21 Nov 2019

See all articles by Marie Hoerova

Marie Hoerova

European Central Bank (ECB); Centre for Economic Policy Research (CEPR)

Cyril Monnet

University of Bern

Ted P. Loch-Temzelides

Rice University

Multiple version iconThere are 3 versions of this paper

Date Written: December 7, 2009


The authors study credible information transmission by a benevolent short-lived central bank. They consider two possibilities: direct revelation through an announcement, versus indirect information transmission through monetary policy. These two ways 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 contrast, information transmission through changes in the interest rate creates a distortion, thus lending an amount of credibility. This induces the private investors to rationally take into account information revealed through monetary policy.

Keywords: Information, Interest rates, Monetary policy

JEL Classification: D80, E40, E52

Suggested Citation

Hoerova, Marie and Monnet, Cyril and Loch-Temzelides, Ted P., Money Talks (December 7, 2009). FRB of Philadelphia Working Paper No. 09-18, Available at SSRN: or

Marie Hoerova (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314


Centre for Economic Policy Research (CEPR) ( email )

United Kingdom

Cyril Monnet

University of Bern ( email )

Gesellschaftsstrasse 49
Bern, BERN 3001

Ted P. Loch-Temzelides

Rice University ( email )

99 Sunset Blvd
Houston, TX Texas 77005
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics