How effective is central bank forward guidance?

Clemens Kool and Daniel Thornton

No 2012-063, Working Papers from Federal Reserve Bank of St. Louis

Abstract: This paper investigates the effectiveness of forward guidance for the central banks of four countries: New Zealand, Norway, Sweden, and the United States. We test whether forward guidance improved market participants? ability to forecast future short-term and long-term rates. We find that forward guidance improved market participants? ability to forecast short-term rates over relatively short forecast horizons, but only for Norway and Sweden. Importantly, there is no evidence that forward guidance has increased the efficacy of monetary policy for New Zealand, the country with the longest history of forward guidance.

Keywords: Monetary policy; Banks and banking; Central (search for similar items in EconPapers)
Pages: 40 pages
Date: 2012
New Economics Papers: this item is included in nep-cba and nep-mon
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Citations: View citations in EconPapers (21)

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Related works:
Journal Article: How Effective Is Central Bank Forward Guidance? (2015)
Working Paper: How Effective Is Central Bank Forward Guidance? (2014)
Working Paper: How Effective Is Central Bank Forward Guidance? (2012)
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