How Effective Is Central Bank Forward Guidance?

Clemens Kool and Daniel Thornton

Review, 2015, vol. 97, issue 4, 303-22

Abstract: This paper investigates the effectiveness of forward guidance for the central banks of New Zealand, Norway, Sweden, and the United States. The authors test whether forward guidance improved market participants? ability to forecast future short-term and long-term rates relative to several benchmarks. They find some evidence that forward guidance improved market participants? ability to forecast short-term rates over relatively short forecast horizons for New Zealand, Norway, and Sweden but not the United States. However, the effects are typically small and frequently not statistically significant. Moreover, in no case are the results uniform across the benchmarks used. In addition, the authors find evidence of convergence of survey forecasters for New Zealand but less so for the other countries and no evidence of convergence for the United States.

JEL-codes: E43 E47 E52 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Working Paper: How Effective Is Central Bank Forward Guidance? (2014)
Working Paper: How effective is central bank forward guidance? (2012)
Working Paper: How Effective Is Central Bank Forward Guidance? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlrv:00049

DOI: 10.20955/r.2015.303-22

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