Forward Guidance or Cacophony

Gamze Demiray, Yasin Onder and Ibrahim Unalmis

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: Until about more than a decade ago, central banks were traditionally run by individual governors. However that trend has changed and countries have started to establish monetary policy committees. Potential disadvantage of an individualistic committee (i.e., through voting) over collegial decision making is the possibility of confusing the markets by speaking with too many voices so the effects of central-bank's forward guidance are muted. This paper shows that a central bank run by a governor who is acting alone does a better job in terms of \forward guidance".

Keywords: forward guidance; voting; communication (search for similar items in EconPapers)
JEL-codes: D71 D78 E58 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-cdm, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:1425

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