EconPapers    
Economics at your fingertips  
 

The Information Effect of Monetary Policy: Self-Defeating or Optimal?

Wesley Janson and Chengcheng Jia ()

Economic Commentary, 2020, vol. 2020, issue 15, 5

Abstract: As the Federal Reserve has become more transparent about its decisions on the federal funds target rate, the general public has begun to regard the rate as not only a benchmark interest rate, but also as a signal about the state of the economy. However, the specific information considered by the public to be revealed is not clearly understood. We investigate this question and find that the information revealed by monetary policy decisions is regarding future output growth, not inflation, and that such an information effect is theoretically optimal and does not make interest-rate policies self-defeating.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.26509/frbc-ec-202015 Full Text (text/html)

Related works:
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:fip:fedcec:88276

Ordering information: This journal article can be ordered from

DOI: 10.26509/frbc-ec-202015

Access Statistics for this article

More articles in Economic Commentary from Federal Reserve Bank of Cleveland Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2021-01-24
Handle: RePEc:fip:fedcec:88276