Can more public information raise uncertainty? The international evidence on forward guidance

Michael Ehrmann, Gaetano Gaballo, Peter Hoffmann and Georg Strasser

Journal of Monetary Economics, 2019, vol. 108, issue C, 93-112

Abstract: Central banks have used different types of forward guidance. This paper reports cross-country evidence showing that, in general, forward guidance mutes the response of government bond yields to macroeconomic news. However, calendar-based guidance with a short horizon counter-intuitively raises it. Using a stylized model where agents learn from market signals, it shows that the public release of more precise information about future rates lowers the informativeness of market signals and, as a consequence, may increase uncertainty and amplify the reaction of expectations to macroeconomic news.

Keywords: Central bank communication; Heterogeneous beliefs; Forward guidance; Disagreement; Macroeconomic news (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 (53)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S030439321930145X
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Can more public information raise uncertainty? The international evidence on forward guidance (2019)
Working Paper: Can more public information raise uncertainty? The international evidence on forward guidance (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:108:y:2019:i:c:p:93-112

DOI: 10.1016/j.jmoneco.2019.08.012

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().