The Cnbc Effect: Welfare Effects of Public Information

36 Pages Posted: 25 Aug 2001

See all articles by Stephen Morris

Stephen Morris


Hyun Song Shin

Bank for International Settlements (BIS)

Date Written: July 2001


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 central bank? We examine the impact of public information in a setting where agents take actions appropriate to the underlying fundamentals, but they also have a coordination motive arising from a strategic complementarity in their actions. When the agents have no private information, greater provision of public information always increases welfare. However, when agents also have access to independent sources of information, the welfare effect of increased public disclosures is ambiguous.

Keywords: Transparency, Disclosures, Coordination, Overreaction To Public Information

JEL Classification: C7, E58, D8

Suggested Citation

Morris, Stephen Edward and Shin, Hyun Song, The Cnbc Effect: Welfare Effects of Public Information (July 2001). Yale Cowles Foundation Discussion Paper No. 1312, Available at SSRN:

Stephen Edward Morris (Contact Author)

MIT ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

HOME PAGE: http://

Hyun Song Shin

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002


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