Communication, Information and Inflation Expectations

Fernando Borraz and Miguel Mello Costa ()

No 2020005, Documentos de trabajo from Banco Central del Uruguay

Abstract: We identify differences in the formation of inflationary expectations, credibility, and prediction errors, depending on the communication and in the level of information of price setters. Estimating dynamic panel data models we identify the relevance of being informed about the inflation target and, about the current inflation rate. We also find that the tone of the monetary policy communication reinforces the bias imposed on the monetary instrument. Through the interaction of information about inflation target and range, and the tone of monetary policy statements of the Central Bank, we conclude that partially informed agents form their expectations differently from non-informed ones, have lower prediction errors, and are more skeptical respect to the inflation target.

Keywords: inflation; credibility; inflation target; communication; monetary policy (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2020
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:bku:doctra:2020005

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