Central bank transparency under model uncertainty
By: Stefano Eusepi.
Contributors: Federal Reserve Bank of New York.
Series: Staff reports ;; no. 199; Staff reports (Federal Reserve Bank of New York : Online) ;; no. 199.
Publisher: Federal Reserve Bank of New York
Published: 2005
Place of publication: [New York, N.Y.]
Language: eng
Format: Electronic resource
Subjects: Banks and banking, Central.; Inflation (Finance); Monetary policy.
Description: "This paper explores the effects of central bank transparency on the performance of optimal inflation targeting rules.  I assume that both the central bank and the private sector face uncertainty about the "correct" model of the economy and have to learn.  A transparent central bank can reduce one source of uncertainty for private agents by communicating its policy rule to the public.  The paper shows that central bank transparency plays a crucial role in stabilizing the agents' learning process and expectations.  By contrast, lack of transparency can lead to expectations-driven fluctuations that have destabilizing effects on the economy, even when the central bank has adopted optimal policies"--Federal Reserve Bank of New York web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 2/15/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.