Comment on “Can more public information raise uncertainty? The international evidence on forward guidance” by Michael Ehrmann, Gaetano Gaballo, Peter Hoffmann and Georg Strasser

Jeffrey Campbell

Journal of Monetary Economics, 2019, vol. 108, issue C, 113-117

Abstract: Ehrmann et al. contains very useful international evidence on the efficacy of forward guidance at anchoring expectations of future policy rates at the ELB. The authors give one finding particular attention, that short-term time-consistent forward guidance raises the responses of expected future policy rates to macroeconomic data surprises. I argue that this empirical result should be interpreted with caution. Nevertheless, the paper’s development of a novel theoretical explanation for it based on financial market prices’ imperfect information aggregation merits the reader’s attention. I conjecture that such “imperfections” are welfare improving in standard New Keynesian models.

Keywords: Effective lower bound; New keynesian monetary policy (search for similar items in EconPapers)
JEL-codes: D83 E43 E52 E58 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:108:y:2019:i:c:p:113-117

DOI: 10.1016/j.jmoneco.2019.09.016

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