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Information Design, Signaling, and Central Bank Transparency

Wataru Tamura
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Wataru Tamura: Nagoya University

International Journal of Central Banking, 2018, vol. 14, issue 5, 223-258

Abstract: This study examines monetary policy and central bank communication when a monetary instrument signals the central bank's private information. A novel feature is that the central bank ex ante determines how much information it acquires and how much of this information it releases to the public. Using a static model with a neoclassical Phillips curve, I show that an optimal information policy is composed of the full disclosure of the bank's acquired information, eliminating the signaling effect of monetary policy. The optimal signal consists of two linear combinations of three shocks, balancing an informational tradeoff between inflation and output stabilization.

JEL-codes: D82 D83 E52 E58 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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International Journal of Central Banking is currently edited by Loretta J. Mester

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