Endogenous Information and Central Bank Transparency

19 Pages Posted: 13 Mar 2015 Last revised: 25 Aug 2015

See all articles by Wataru Tamura

Wataru Tamura

Nagoya University - Graduate School of Economics

Date Written: August 25, 2015


This paper studies monetary policy under discretion when the central bank ex ante determines information to be acquired and made public. In a general setting, wherein a monetary instrument signals the central bank's private information, I show that an optimal information policy comprises the full disclosure of acquired information, which eliminates the signaling role of the monetary policy. I find that an information policy combined with a discretionary monetary policy implements an optimal commitment policy. Using a simple monetary model, I characterize the optimal policy that publicizes multiple indices, inducing a correlation in public expectations regarding shocks to the economy.

Keywords: monetary policy, transparency, signaling, information acquisition

JEL Classification: E58, E52, D82, D83

Suggested Citation

Tamura, Wataru, Endogenous Information and Central Bank Transparency (August 25, 2015). Available at SSRN: https://ssrn.com/abstract=2577100 or http://dx.doi.org/10.2139/ssrn.2577100

Wataru Tamura (Contact Author)

Nagoya University - Graduate School of Economics ( email )

1 Furo-cho
Nagoya, 464-8601

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