Strategically reported inflation expectation: a cheap-talk approach
Marcelo Griebeler ()
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Marcelo Griebeler: Federal University of Rio Grande do Sul
Economics Bulletin, 2019, vol. 39, issue 1, 264-269
We study the strategic relationship between a central bank and a biased economic agent (forecaster) responsible for reporting the economy's inflation expectation to the former. Through a simple cheap-talk model, we show that the possibility of informative communication between the above players increases as: (i) the forecaster's bias decreases; (ii) the degree in which expectations affect current inflation increases; and (iii) the uncertainty about the true value of the inflation expectation - measured by its variance - increases. Our analysis is a first step towards a deeper comprehension of the strategic relationship between central banks and those responsible for reporting inflation expectation.
Keywords: monetary policy; central bank; survey-based measures; game theory. (search for similar items in EconPapers)
JEL-codes: E5 C7 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-18-00928
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