Central bank communication and multiple equilibria

研究成果: Article査読

3 被引用数 (Scopus)

抄録

In this paper, we construct a simple model for communication between a central bank and money-market traders. It is demonstrated that there are multiple equilibria. In one equilibrium, traders truthfully reveal their own information, and by learning this, the central bank can make better forecasts. Another equilibrium is a "dog-chasing-its-tail" equilibrium described by Blinder (1998). Traders mimic the central bank's forecast, so the central bank simply observes its own forecast from traders. The latter equilibrium is socially worse, as inflation variability becomes larger. As policy implications, we find that too-high transparency of central banks is bad because it yields the "dog-chasing-its-tail" equilibrium, and central banks should conduct continuous monitoring or emphasize that their forecasts are conditional because doing so eliminates the "dog-chasing-its-tail" equilibrium. We also consider the possibility of the existence of an optimal degree of transparency.

本文言語English
ページ(範囲)145-167
ページ数23
ジャーナルInternational Journal of Central Banking
6
3
出版ステータスPublished - 2010 9 1
外部発表はい

ASJC Scopus subject areas

  • 財務
  • 経済学、計量経済学

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